I did not use TurboTax last year, but am using Premier this year. I am a member of an LLC which sold some assets in 2021 and had a distribution less than the original investment, The 2021 Passive Activity Loss carryover is about twice the original investment (this loss was not allowed in previous years). When I enter the K-1 info and the Passive Activity Carryover loss in turboTax, it does not appear that the carryover is helping offset the "gains" in the K-1. My tax increases significantly. I think I am missing something.
the gains from sales are probably not a passive gain (lines 8 through 10) and therefore your PAL c/o's will not be used. distributions do not affect PAL. however, this is a presumption because I don't know what lines the gains are on. you also need to track your basis. Turbotax does not do this. the reason is that when the PALs are finally allowed they can't exceed your basis in the partnership.
Thanks Mike - The K-1 is showing a 9A (net long term capital gain) that is more than my original investment in the LLC. It also has a value in 9c and in 10. The value in 10 is $1K less than the 2021 distribution (from the sale of the asset).
The affect of this K-1 is driving my Long term capital gains up by the value in 9A ($102K), and thus driving up my tax bill significantly.
It depends on the type of K-1 you received (1120S or 1065). If you received a K-1 1120S you can enter your correct basis on Form 7203 (which is on the S Corporation Basis (IRS requirement) screen in TurboTax Online). If you received a K-1 1065 you should enter your basis information on the Enter Capital Account Information screen. Both of these screens are part of the step-by-step interview for entering a K-1 in both TurboTax Online and Desktop.
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