K-1 Losses - Deductible?

[zeros]

When the tax preparer receives a k-1 from the client and the return was prepared by another accounting firm, has the other accounting firm determined the amount "at risk" and therefore deductible on the 1040?
Hope I worded this correctly. Was kind of curious of this.

[Gretel]

When the tax preparer receives a k-1 from the client and the return was prepared by another accounting firm, has the other accounting firm determined the amount "at risk" and therefore deductible on the 1040?
Hope I worded this correctly. Was kind of curious of this.

Here is what I understand your question to be. 1065 or 1120S was prepared by other accounting firm and K-1 shows a loss. Does this K-1 only show the deductible loss?

The answer is no. The shareholder is required to keep track of basis and at-risk amount. The preparer of 1065/1120S has the ability to keep track of it. I attach a basis worksheet to all my K-1's.

The 1040 preparer is required to have basis/at-risk calculations in his file (1065) and also send with tax return (1120S) when claiming a loss.