Have loses on my K1 but TurboTax shows 0 for Passive Income Loss

[pineapplemike]

I have a K-1 from a Restaurant I invested and I do not participate in management of the business.

It reported loses of $7K this year (and the prior year -$4K).

All of my investment in this activity is at risk.

After entering the K-1 information into TurboTax, the final Schedule E (form 1040) has '0' for the Passive Loss and Line 41 Total Income or (loss) is 0.  

Why does it show as $0 instead of -$7K?

When i look at Form 8528 (Passive Activity Loss Limitations), I do see the -$7K and -$4K from the prior years in Worksheet 3. 

Am I not understanding this correctly? Is Turbo Tax not entering the K-1 correctly or did I enter the information incorrectly? 

Can I only use this passive income loss to offset passive income? Or do I need to wait until I have a complete loss?

Thank in advance! 

[Mike9241]

I have a K-1 from a Restaurant I invested and I do  not participate in management of the business.

It reported loses of $7K this year (and the prior year -$4K).

the fact you do not participate makes the loss passive. since it is not rental real estate, the passive loss is disallowed in its entirety. you do get a carryforward for the loss. it will continue to be non-deductible until there is income to offset it or you dispose of the activity.  refer to form 8582

[pineapplemike]

Thanks for the quick reply Mike 9241.

I have another K-1 for a Real Estate Investment (rental property) which I also do not materially participate in. I entered a loss in Part III Box 2 (Net rental real estate income/loss). This also shows up as '0' in Schedule E (form 1040). 

Should it also show as 0 like the restaurant investment?

I see both investments in Form 8582.

[JulieC14]

Yes, since you do not materially participate in the rental real estate, the loss is subject to the passive activity loss rules as Mike9241 describes above.  For a rental property, the exception is if you actively participated in the rental property, then you could deduct up to $25,000 of your rental loss even though it’s passive.  See more information here:  Real Estate Tax and Rental Property