I have a large Sec 1231 loss from the sale of a residential rental property. The loss flows from the 4797, to the Form 461. This client also has a large Ordinary Loss from his S-Corp. On the form 461, the 1231 loss is backed out in Part II, line 11, of the excess business loss calculation, I would have thought since the client is active in the rental, it would be part of the excess business loss, and carried forward. Instead, I am able to realize the entire loss, due to total disposition, against the other taxable income. Client is not a real estate professional. Am I missing anything? I reviewed the spidell handbook, but don’t see any guidance on this.