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Form 8582 - Schedule K-1 Passive Losses
1

If your Schedule K-1 is showing unallowed prior year losses and current year unallowed losses in box 2, but prior year unallowed losses are not showing on Form 8582, Passive Activity Loss Limitations, you have most likely indicated an amount in box 1 as nonpassive and an amount in box 2 as passive on the same K-1.

Per the instructions for Form 8582, page 9:

Worksheet 3

Column (c). Enter the unallowed losses for the prior years for each activity. You find these amounts on Worksheet 5, column (c), of your 2017 Form 8582. Enter the total of column (c) from your 2018 Worksheet 3 on line 3c of Form 8582.

In order to get this to work in the TaxAct program, follow the instructions below:

Schedule K-1 for Form 1065 (Partnerships)

  1. Click Federal. On smaller devices, click in the upper left-hand corner, then choose Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand the category, then click Partnership Income (Form 1065 Schedule K-1)
  3. Click Review to review the Schedule K-1 already entered
  4. Remove the amount in box 2
  5. Click Continue until you reach the screen titled Partnership - Summary
  6. Click New Copy of Partnership Schedule K-1 (Desktop users click Add) to create a new Schedule K-1
  7. Enter the same Partnership name and EIN as the original K-1
  8. Enter the prior year unallowed loss in box 2

Schedule K-1 for Form 1120S (S Corporation)

  1. Click Federal. On smaller devices, click in the upper left-hand corner, then choose Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand the category, then click S-Corporation Income (Form 1120S Schedule K-1)
  3. Click Review to review the Schedule K-1 already entered
  4. Remove the amount in box 2
  5. Click Continue until you reach the screen titled S Corporation - Summary
  6. Click New Copy of S Corporation Schedule K-1 (Desktop users click Add) to create a new Schedule K-1
  7. Enter the same S Corporation name and EIN as the original K-1
  8. Enter the prior year unallowed loss in box 2

You should now see the amount transferring to Form 8582 as expected.