the client has sch E net income 70K and 2 1065 K1 rental loss (both comercial property rental, cash purchase , no loan) ) 120K
W2 income 50K, no other items.
My understanding is sch e net income can be offset by 1065 K1 rental loss, then t will have 25K loss allowance from the remaining losses to offset w2 wages , but however, I couldn't come to this result.
the software ( Drakesoft) I use either disallowed all 120K K-1 losses ( if check the box "other passive: ) or allow all ( if check
the box " non passive " or "active rental"
Please advise , thanks!