Form 4797, basis, passive activity, and at-risk adjustments

When you report a loss from a disposition in a K-1 activity on either line 2 or line 10 of Form 4797, there may also be an adjustment that negates the loss reported on the same line. This adjustment can be labeled as a
Basis Adjustment
, an
At-Risk Adjustment
, or a
Passive Activity Adjustment
.
To change or eliminate the adjustment, make an entry in the K-1 activity for the type of adjustment.
  • For a
    Basis Adjustment
    , review the data entry on the PBasis or SBasis screens and the
    Basis
    worksheets.
  • For an
    At-Risk Adjustment
    , review the data entry on the 6198 and 6198-2 screens, and Form 6198.
  • For a
    Passive Activity Adjustment
    , review the Passive Activity Code selected on the K1-2 screen nd Form 8582.
Form 4797 may have an
At-Risk Adjustment
because of a disposition in a rental unit. For this adjustment, review the 6198 and 6198-2 screens, and Form 6198 in the rental unit.
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