The video below explains how passthrough losses can be limited and shows statements with additional details for the calculated amounts flowing through the return in a 1040 using CCH Axcess™ Tax and CCH® ProSystem fx® Tax.  



Passthrough losses entered throughout the return can flow through various forms before actually getting to the Schedule E. 

Notes

• If the K-1 is not subject to all the items, the loss allowed will flow to the next applicable form down.
• Once a loss is allowed through a worksheet or form, it will not be subject to that worksheet or form again.

Example

A 1040 return has two 1065 Partnership passthrough K-1s:

• Partnership 1
  • This partnership is passive.
  • Is subject to basis limitations.
  • Is subject to at-risk limitations.
  • Has a loss.
• Partnership 2
  • This partnership is passive.
  • Has income.

In this example, the Partnership 1's loss will first flow to the K-1 Basis Limitation > Partnership Basis worksheets. The loss will be allowed to the extent that there is basis. Any loss allowed will carry to the Form 6198 - At-Risk Limitation. Here the loss will be limited to the extent of at-risk basis. Any allowed loss here wil carry to the Form 8582 - Passive Loss Limitations.