Passive & Non-Passive activities on same K-1

Forum|Forum|4 years ago
October 12, 2021
3 replies
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Is there a preferred way to enter passive & non-passive activities appearing on a single K-1 ? For example Line 1 Ordinary business income(loss) is non-passive and Line 2 Net Rental Real Estate income(loss) is passive. If box is checked as Not a Passive Activity line flows through as non-passive but line 2 also comes through the same way. If the box is not checked Line 1 and Line 2 are netted together and treated as passive. Do we need to use the "Separately Stated Income & Deductions" input line ?

Lacerte Tax

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Best answer by Jack4

Hello, Calneva. If you have a K-1 with both passive and non-passive items (box 1 and box 2), we recommend creating two separate activities. One for passive items and the other for non-passive for the same K-1. This will keep the K-1 separate for the different categories of income.

PATAX

Level 12

Maybe try splitting it up on two separate K1 worksheets and see if that works...

C

CalnevaAuthor

Level 3

Yes have done that in the past but with need to track basis you can't really input the same basis on two separate K-1 inputs or at least there's no way to parse out the basis shown on the single K-1 between two K-1 inputs. Don't really think that works.

J

Jack4

Level 4

Hi, Calneva. You are correct about the basis. We recommend making basis entries on one of the K-1 activities to match the other. In other words, use Other increases/decreases on the K-1 screen so that the basis properly reflects the increases/decreases. Then the other K-1 will show blank.

J

Jack4Answer

Level 4

Hello, Calneva. If you have a K-1 with both passive and non-passive items (box 1 and box 2), we recommend creating two separate activities. One for passive items and the other for non-passive for the same K-1. This will keep the K-1 separate for the different categories of income.

C

CalnevaAuthor

Level 3

Yes but how do you properly show the basis provided on the single K-1 when inputting to two separate K-1 inputs in Lacerte ?

J

Jack4

Level 4

On the K-1 screen under the Basis Limitation section, use the other increases/decreases fields to properly reflect the other activity information. Only do this on one K-1 activity, so that you don't have two different basis schedules for one K-1.