S corp PPP Basis

Forum|Forum|2 years ago
August 18, 2023
1 reply
32 views

Hi all,

I have an issue adjusting the allowable loss on a 2021 1040.

My client incurred a 120K loss on the 2021 1120S. Stock basis carryover from 2020 is 40K. He had 105K in PPP loans forgiven in 2021 which increased basis and took 100K in distributions which decreased basis. My understanding is that he's only allowed to take 45K in losses on the 1040 but when I bring over the K1 and check the some investment not at-risk box, it's allowing the full 105K PPP (other tax exempt income) as a deduction and carrying over the remaining balance. Any ideas as to how to properly adjust this?

Thanks

ProSeries Professional

This topic has been closed for replies.

Best answer by TaxGuyBill

@Avs19 wrote:

I guess that's where I'm confused. Which form would I manually enter that? Do I have to override a line?

When entering the K-1, only enter the allowable amount. So if Box 1 shows $120,000 loss, but only $45,000 is allowed due to Basis limitations, just enter $45,000.

You will need to manually keep track of the unallowed loss, and manually enter it when it becomes allowable.

You should not fill out Form 6198 for At-Risk limits.

sjrcpa

Level 15

You need to manually enter only the allowable loss. Keep track of the carryover on your own schedule. ProSeries does not apply basis limitations.

The more I know the more I don’t know.

A

Avs19Author

Level 6

I guess that's where I'm confused. Which form would I manually enter that? Do I have to override a line?

T

TaxGuyBillAnswer

Level 15

@Avs19 wrote:

I guess that's where I'm confused. Which form would I manually enter that? Do I have to override a line?

When entering the K-1, only enter the allowable amount. So if Box 1 shows $120,000 loss, but only $45,000 is allowed due to Basis limitations, just enter $45,000.

You will need to manually keep track of the unallowed loss, and manually enter it when it becomes allowable.

You should not fill out Form 6198 for At-Risk limits.

Sign up

Login with SSO

Let's get you signed in

Login with SSO