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If your Partnership Schedule K-1 (Form 1065) Partner’s Share of Income, Deductions, Credits, etc. has an amount in Box 13 (Code W) with the Form 1040 filers should enter the Box 13, Code W loss on Schedule E, Part II as a non-passive loss instructions, the following steps will enable you to enter that into the TaxAct program.

  1. After entering the Schedule K-1 information in your return (other than the amount in Box 13, Code W), add a second Schedule K-1 to your return.
  2. The name and EIN fields must be completed in order for the appropriate amounts to transfer back to Schedule E, Page 2. Enter the same name and EIN as shown on the first Schedule K-1 entered.
  3. Enter the amount from Box 13, Code W as a negative amount on Line 1 of the second Schedule K-1. To have the return treat this amount as non-passive, you will need to indicate that at the top of the Schedule K-1 (done in the Q&A Interview by selecting "Material Participant" on the screen titled Partnership - Material Participant while entering the Schedule K-1 information).

This will result in the amount transferring back to Line 28, Column (h) of the Schedule E (Form 1040) Supplemental Income and Loss, Page 2. By creating a second Schedule K-1 it is possible, when necessary, to mark "Material Participant" on one Schedule K-1 and "Not A Material Participant" on the other Schedule K-1. This indication is what determines whether a loss is passive or non-passive and both cannot be indicated on the same Schedule K-1.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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