Changing K1 1065 rental income/loss from Passive to Non-Passive

Forum|Forum|1 year ago
August 29, 2024
5 replies
30 views

Client qualifies to treat rental losses as non-passive and offset the loss against regular income. The rental is a short term rental & the client actively & materially participated in the activity. How do I get ProSeries to change it to Non-passive? I have checked the box for active & material participation and the box indicating that the rental property is subject to recharacterization rules. Nothing is working. I cannot check the box in the Info Worksheet indicating that the taxpayer is a Real Estate Professinal since he is not. I am at my wits end trying to get this return done, please help

ProSeries Professional

George4Tacks

Level 15

500 hours to be non passive? https://www.irs.gov/publications/p925#en_US_2023_publink1000104581

Answers are easy. Questions are hard!

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RadhaAuthor

Level 3

I know that the income is non-passive (I have done extensive research and am positive that it is non-passive). I need help in changing it to non-passive in ProSeries.

Accountant-Man

Level 13

If he is a limited partner in the 1065, he cannot qualify as non-passive. Is he an LP?

ps Rental income is almost always passive, unless it is short-term yada yada, which would then qualify as Business income, K-1, line 1.

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RadhaAuthor

Level 3

I know that the income is non-passive (I have done extensive research and am positive that it is non-passive). I need help in changing it to non-passive in ProSeries.

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Terry53029

Intuit Community Champion

I believe you may be confusing income from a K1 on line 1 (income from a trade or business) which can be passive or non-passive depending on facts. Income from line 2 (rental income) is normally passive unless your client is a Real Estate Professional.