Passive activity codes (1120)

Show expandable text

New (tax) year, new help!

Fixed Assets and UltraTax CS 2023 help is now on Help and Support. We're still moving articles, but you can find most content for the 2023 tax year there. Continue using the Help & How-To Center for tax years 2022 and older.

UltraTax CS uses passive activity codes to determine the tax treatment of the entity. Enter passive activity codes in the Passive Activity section of the input screen. Passive activity codes are consistent throughout UltraTax CS. The following table shows the passive activity codes available and their tax treatment in UltraTax/1120.

Passive activity code Tax treatment of losses
1, Passive activity Overall loss not allowed
3, No limitation applied No limitation on loss allowed

Do not enter more than one type of activity in a set of K1 screens. If the client has two different passive activity types in the same K1, enter them in separate sets of input screens. For example, if the client has a K1 with active ordinary income as well as a rental real estate loss, enter them on separate sets of Screens K1, K1-2, K1-3, K1-4, K1-5, and K1-6. You must enter these amounts separately for UltraTax CS to properly treat the associated sales, credits, and carryovers.

The available passive activity codes and default values vary among input screens. The following table lists the passive activity codes available for each passive form and/or schedule and input screen, and shows the default value.

Form / Schedule Folder Input screen Passive codes available
Form 1120, Page 1 Rent & Royalty Rent-2 1 (default), 3
Form 1120, Page 1 K1 1065, 1041 K1 1 (default), 3
Schedule F Farm F-3 1, 3 (default)
Form 4835 Farm Rental 4835-3 1 (default), 3

Related topic: Passive activities overview

Was this article helpful?

Thank you for the feedback!