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Second opinion] I am preparing 1040 that have a k-1 from his…

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Second opinion] I am...

Second opinion] I am preparing 1040 that have a k-1 from his S Corp which is showing the following:

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I am preparing a 1040 that have a K-1 from his S-Corp which shows the following: Part III Box 1 Business Loss -152,828, Box 12 A $1024, Box 15 A $158, Box 16 C $867, Box 16 D $77,919. His stock basis balance before distribution was $13,790; thus the remaining balance of distribution was $64,129 which is taxable as a capital gain.His ending basis was zero therefore non of his business loss is deductible. My questions is as follows: 1. Where on schedule D do I data his capital gain of $64,129?, 2 Where do I report his non-passive business loss $152,828 that is not allowed on sch E?

Submitted: 9 months ago.Category: Tax
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Customer reply replied 9 months ago
Hello Mark answered both questions but on ques 2, he stated that I need to file Form 6198 to suspend loss, I followed his instruction but the total loss still remain on line 17 of 1040. This is what I have entered on form 6198 as per Mark's instruction Part 1 line 1, I entered -$152,828.00, Part II, Line 6 I entered the beginning stock basis, line 9 was the total distribution, what else do I need to do to remove that -$152,828 from line 17 of 1040?
Answered in 9 hours by:
9/21/2017
Tax Professional: Richard, Tax Attorney replied 9 months ago
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 56,905
Experience: 29 years of experience as a tax, real estate, and business attorney.
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Hi! My name is Richard & I will be helping you today! It will take me a few minutes to type a response to your question. Thanks for your patience!

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Tax Professional: Richard, Tax Attorney replied 9 months ago

Good morning. Your question is a bit outside my specific area of expertise as I don't do tax returns, As a result, I am not confident that I can provide a complete and accurate assessment. Therefore, I am going to opt out to open your question up to all experts so another expert can hopefully timely provide you the information you seek. Please do not respond to this post as it will only slow the process of such an expert picking up your question. Take care.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 9 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,459
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi - Form 6198 should generate automatically. See this from TaxAct

At Risk Limitations Form 6198

The at-risk rules place a limit on the amount you can deduct as losses from activities. Generally, any loss from an activity (such as a rental) subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year.
...
You are considered at-risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity.
...
If there is a loss, and the checkbox is marked that Some investment is not at risk, then Form 6198 At-Risk Limitations is calculated to determine the deductible loss. If that box is checked, the screen At-Risk Limitation - Ordinary Income (Loss) will be the next screen and there you would enter the amount of the loss (as a negative number). If this is not entered as a negative, (i.e. -100.00) so it appears as a loss, then Form 6198 will not generate.

...

(https://www.taxact.com/support/1004/2016/at-risk-limitations-form-6198)

...

Also see this:

...

While the at-risk limitations are calculated on IRS Form 6198 At-Risk Limitations and the passive activity limitations are calculated on IRS Form 8582 Passive Activity Loss Limitations, there is not an IRS form for the potential limitations on the amount of corporate losses that you may deduct based on your basis in the corporation. You would need to enter only the loss allowed on Line 1 of the Schedule K-1, and then manually track the shareholder basis and the amount not allowed in the current year which could be carried forward to the time when the basis in the S Corporation allows the loss to be taken.

...

(https://www.taxact.com/support/1600/2016/schedule-k-1-s-corporation-1120s-loss-limitations)

...

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