K-1 (1065) With PTP Indicator

[TonyP]

Have a client with a Partnership K-1, he's a limited partner in a PTP (Publically Traded Partnership). I realize that I should check the box that it's a PTP, however should I also check the box that it's a passive activity? The K-1 shows an ordinary loss with some interest income, the interest income flows to the Sch-B but the loss is not allowed.

Also what happens to the unallowed loss? Is it allowed in subsequent years if the client gets ordinary income from the partnership and/or are the unallowed loss used to increase basis whenever the client sells his interest?