Efile Reject - Schedule C passive loss
This year has been one thing after another......
I have two clients - efiles rejected because Schedule C - has the box Did not "materially participate" checked. PAL on the form - so no losses deducted. Nothing new - these two have had this for the last several years. No home office tied to either one. Both passive and carrying forward. It wants me to uncheck the box - another nothing else is overridden. Then it will declare the loss on the return. It needs to carry forward.
Is this a bug - neither wants to paper file. There is nothing unusual about this from any other year. PLEASE HELP!! I can not spend another day on the phone with lacerte support person that doesn't know what end is up..... From what I find on the error code - this is every indication that it's another bug in the program.
FEDERAL Filing Rejected - This filing was rejected by the taxing agency on April 05, 2026. You need to fix errors that caused the rejection before it can be accepted by the agency. Follow these instructions for fixing the errors and you can transmit again at no additional charge.
Reject: Error SC-F1040-023-01: Each 'NetProfitOrLossAmt' in Form 1040 Schedule C, must be equal to 'TentativeProfitOrLossAmt' minus (-) 'HomeBusinessExpenseAmt'.
Form: 0(00)
Field: -31694(/efile:Return/efile:ReturnData/efile:IRS1040ScheduleC/efile:TentativeProfitOrLossAmt)
Occurrence: 00000(0001)
Resolution: The "Deductible gain (loss) (-1=none) [O]" override field in the Schedule C input cannot be used for efiled returns. If the affected business activity is computing a loss, and the loss is subject to the passive activity loss limitations, check the box for "Did not 'materially participate." If the business is subject to the at risk loss limitations, use the field "Amount at risk (blank=all).
Please remove any override fields in the Schedule C input, and retransmit the filing.
This filing was postmarked by the transmitter April 05, 2026 12:32 PM PST.
(ref. #0)
CALIFORNIA Filing Rejected - This filing was rejected by the taxing agency on April 05, 2026. You need to fix errors that caused the rejection before it can be accepted by the agency. Follow these instructions for fixing the errors and you can transmit again at no additional charge.
Reject: Error REJ001: This state filing was rejected because the federal taxing authority has not yet accepted or has rejected the federal filing.
Form: 0(00)
Field: (0000)
Occurrence: 00000(0000)
Resolution: Correct the errors in the federal filing and then re-file these returns for E-File after the federal filing is accepted.
This filing was postmarked by the transmitter April 05, 2026 12:32 PM PST.
(ref. #0)
