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 instructions that state Form 1040 filers should enter the Box 13, Code W loss on Schedule E, Part II as a non-passive loss, follow these steps to enter that into the TaxAct program:
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.