How to you get Lacerte to separate a passive ordinary loss from a nonpassive ordinary loss on an S-corp return? I have a client that has nonpassive ordinary income from a business. The client also owns an interest (and gets a K-1) from another entity which is passive ordinary income. Lacerte nets them together. Aren't they supposed to be reported separately on the K-1?
I am getting confused here. You're trying to do the 1120S? The corporation (call it "A) has its own business, and additionally is a shareholder in a different corporation (call it "B")?
You're saying that B throws off passive income or loss to A, and A then throws off "active" income to the ultimate shareholder (call that person "Mr X")?
But you think A's passive income from B, should flow thru to Mr X as passive, and only A's "active" income should flow thru as "active"?
Instead, Lacerte nets all income and all losses as one figue, and somehow Mr. X is supposed to know what to do with it! That's a good one! I don't know what to do. I just did a test where the flow-thru entity (B) gave off a PASSIVE loss to the main S-corp (A) and yet the shareholders were getting their share of everything as one blob!
Maybe the Lacerte guru knows!
This is probably a terribly obvious question, but have you checked your Schedule E Page 2 to see if they are being reported separately there? Also, are you sure that the active K-1 is marked as not a passive activity. Lacerte's default is to assume that its passive, unless you check the box.
Sorry, I was thinking of the individual return, not the corporate return when I posted my last comment.
Right. I did my test on the 1120S program, and it was netting all figures as one on the individual K-1's, and somehow those shareholders were supposed to know if they were passive or not, etc. And as the original post-er pointed out, even if Mr X was "active" with regard to corp "A," how would he know that the "B" loss which was part of the "A" bottom line, was really "passive?"
