Rent losses reduced K-1 income

[Pacun]

Client owns a house and rents out the basement. Rent income is less than expenses and depreciation and it becomes a loss. Client also has a K-1 from a partnership where she woks. Prior preparer (CPA) did not file sch SE because rent losses were $4,000 and K-1 showed $4,200 on guaranteed payments for worked done as partnership member. Should I amend?

This year guaranteed payments are $5,000 and rent losses are $6,000, I understand that I should not report $1,000 in losses because he lives in the house. Do I override 1040 to avoid the losses being transferred or is there a check mark that I can do on Sch E or somewhere?

This is not a Real Estate partnership as stated by mistake on the title.