Interactive K-1 Analyzer
Schedule K-1, Demystified.
Unlock the tax-saving potential hidden in your pass-through entity. Interactively explore complex K-1 items and build a smarter tax strategy.
Start AnalyzingInteractive K-1 Form Explorer
A Schedule K-1 is the blueprint of your pass-through entity's financial performance. Learn what each box signifies and why "separately stated" items are so critical. Click any box to see an explanation.
This is a simplified example. Actual K-1s contain many more boxes and codes.
The 4-Hurdle Journey of a Loss
A loss on your K-1 isn't automatically deductible. It must clear four sequential hurdles. Fail any one, and the loss gets suspended. Click each step to learn more.
Hurdle 1: Basis Limitation
Losses cannot exceed your tax basis (your investment) in the entity. There's a critical difference here between S-Corps and Partnerships.
Hurdle 2: At-Risk Limitation
Losses that clear the basis hurdle are further limited to the amount you are personally "at-risk" of losing economically.
Hurdle 3: Passive Activity Loss (PAL) Limitation
The most complex hurdle. Passive losses can generally only offset passive income. Explore strategies to overcome this below.
Jump to the Strategy Lab →Hurdle 4: Excess Business Loss (EBL) Limitation
A final cap applies to the total net business losses you can deduct in a single year across all your businesses.
Passive Loss Strategy Lab
Rental losses are "per se passive." Explore the main strategies to break this rule and deduct your losses against other income. Which path is right for your situation?
Strategy 1: $25,000 Special Allowance
This benefit is for "active" landlords with moderate income. See how your income (MAGI) affects your deduction with the slider.
Maximum Allowable Deduction
$17,500
Strategy 2: Real Estate Professional (REP)
The holy grail for high-income earners to deduct unlimited losses. Do you meet the strict time requirements?
Result: Check the boxes to see if you qualify.
Strategy 3: The Short-Term Rental (STR) Loophole
A powerful alternative for high-earners who can't qualify as a REP.
The "7-Day Rule" If the average period of customer use for your property is 7 days or less (e.g., an Airbnb), it's not considered a "rental activity" for tax purposes. This means you only need to prove "material participation" to deduct all your losses, without needing REP status.