If your Partnership Schedule K-1 (Form 1065) Partner’s Share of Income, Deductions, Credits, etc. has an amount in Box 13 (Code W) with instructions that state Form 1040 filers should enter the Box 13, Code W loss on Schedule E, Part II as a non-passive loss, follow these steps to enter that into the TaxAct program:

1. From within your TaxAct Return (Online or Desktop), after entering the Schedule K-1 information in your return (other than the amount in Box 13, Code W), add another Schedule K-1 to your return:
   • Click Federal, click the Business Income dropdown, click Partnership income (Form 1065 Schedule K-1), click + Add Partnership Schedule K-1.
2. Continue with the interview process until you reach the screen titled Partnership – Schedule K-1 Information, then click the Checkbox next to Box 13 – Other deductions.
3. On the screen titled Partnership – Other Deductions, click Yes.
4. On the screen titled Partnership – Other Deductions – Code W and X, enter your amount from Box 13, Code W as a negative amount.
5. On the screen titled Partnership – Material Participant, click the Circle next to Material participant to report the deduction as non-passive.

This will result in the amount transferring back to Line 28, Column (h) of the Schedule E (Form 1040) Supplemental Income and Loss, Page 2. By creating a second Schedule K-1 it is possible, when necessary, to mark “Material Participant” on one Schedule K-1 and “Not A Material Participant” on the other Schedule K-1. This indication is what determines whether a loss is passive or non-passive and both cannot be indicated on the same Schedule K-1.