Do I enter K-1 box 1 and box 2 income (loss)?

You need to set up two separate K-1 input forms.

• The first you will enter all lines / amounts on the K-1 EXCEPT box 2.
• The second K-1 you will enter only box 2.
• All should work fine once you do this.  

Ok.  We need to look at a couple other items:

1. Since I can't see your input or your K-1:
1. You don't mention the type of entity you are receiving the K-1 from.  You need to look at Question G on the K-1 if this is from a partnership / LLC.  
2. You then need to look at how you responded to the interview questions when you input the separate K-1 for box 2.  Did you indicate that you actively participate in the rental activity (of course only answer this affirmatively if it is true).
3. The same will hold true for the S corporation K-1 in answering the questions.
2. Once you have gone back and reviewed your responses to the questions, look at your form 8582.  Your loss should be reflected in Part 1 "section" 1.  If you actively participate in the rental activity, then the loss should also be reflected in Part II.  Here you will note a couple of things:
1. If your modified adjusted gross income exceeds $100,000 your rental loss will be limited.  If your modified adjusted gross income exceeds $150,000 you will not be allowed any of this rental loss.  I am attaching a couple of links for you to 
2. https://www.irs.gov/pub/irs-pdf/f8582.pdf
3. https://www.irs.gov/businesses/small-businesses-self-employed/passive-activity-loss-atg-chapter-2-re...