1120-US: Form 6198, line 5 displays a current-year loss (FAQ)

Alerts and notices
Leave feedback

Contact information (optional):

Leave this blank:

Please tell us how we can make this information more helpful.


Characters left:

MFA required for electronic filing

Effective May 3rd, the 2017 version of UltraTax CS requires multi-factor authentication (MFA) to transmit e-files from CS Connect. Find out more.

Question

What does UltraTax/1120 do if Form 6198, line 5 shows a current-year loss?

Answer

Per Form 6198 instructions, if line 5 shows a current-year loss, the loss may be limited to the income or gains, if any, included on lines 1, 2, and 3. If lines 1, 2, and 3 include income, gains, and losses, separate the items. The income and gains are fully reportable on the tax return. The losses and deductions are allowable (subject to any other limitation such as the passive activity rules) to the extent of income and gains. To determine the allowable portion of each loss or deduction, UltraTax CS divides each loss or deduction from the activity by the total losses and deductions from the activity on line 5. UltraTax CS then multiplies the total income and gains by this fraction. The At-Risk Limitation Worksheet, Schedule F At-Risk Limitation Worksheet (Regular Tax and AMT), Farm Rental At-Risk Limitation Worksheet (Regular Tax and AMT), and Rent and Royalty At-Risk Limitation Worksheet detail the allowable amounts, if any, for regular and AMT calculations.

Related topics

Share This