Question
Can Section 1231 losses be used to offset K-1 income (nonpasive) or self employment income?
Taxpayers sold business property in 2017 at a loss and generated $471,000 section 1231 losses. This year they have over $100,000 K-1 income from a business (100% shareholders in an S-corporation) as well as $150,000 self employment income. I thought 1231 losses could offset ordinary income but program isn't taking the losses into consideration and offsetting either of these income streams. Did I miss the boat? Thank you in advance to anyone who is taking the time to respond this late into tax season!!!
