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Form 8582 - Schedule K-1 Passive Losses
1

If your Schedule K-1 is showing unallowed prior year losses and current year unallowed losses in Box 2, but prior year unallowed losses are not showing on Form 8582 Passive Activity Loss Limitations, you have most likely indicated an amount in Box 1 as nonpassive and an amount in Box 2 as passive on the same K-1.

Per IRS Instructions for Form 8582, on page 9:

Column (c). Enter the prior year unallowed losses for each activity. You find these amounts on Worksheet 5, column (c), of your 2019 Form 8582. Enter the total of column (c) from your 2020 Worksheet 1 on line 1c of Form 8582.

To get this to work in the TaxAct program:

Schedule K-1 for Form 1065 (Partnerships)

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand, then click Partnership income (Form 1065 Schedule K-1).
  3. Click + Add Partnership Schedule K-1 to create a new copy of the form or click Edit to review a form already created.
  4. Continue with the interview process to enter all of the appropriate information.
  5. On the screen titled Partnership - Prior Year Losses, click Yes.
  6. On the screen titled Partnership - Prior Year Unallowed Losses, enter the prior year unallowed losses, then click Continue.

Schedule K-1 for Form 1120S (S Corporation)

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand, then click S Corporation income (Form 1120S Schedule K-1).
  3. Click + Add S Corporation Schedule K-1 to create a new copy of the form or click Edit to review a form already created.
  4. Continue with the interview process to enter all of the appropriate information.
  5. On the screen titled S Corporation - Prior Year Losses, click Yes.
  6. On the screen titled S Corporation - Prior Year Unallowed Losses, enter the prior year unallowed losses, then click Continue.

You should now see the amount transferring to Form 8582 as expected.

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.