If you can document that there was no cash impact to the ongoing household and/or that it was an accounting loss but not a cash loss, there should be no reason to charge K-1 losses against an individual. Some business structures show the cash movement in/out per shareholder on the face of the K-1, too.
Born once? Die twice.
Born twice? DIE ONCE!
Loan Review, HMDA, ALLL
Opinions are my own and do not reflect any others