I have suspended passive losses from K1s and the partnership ended and made a final distribution in 2017. Can I deduct the brought forward losses

[njlaird]

Partnership is a low income housing tax credit one. 

[Rick19744]

As you may or may not understand, there is a specific order that determines if losses are allowed on a tax return:

• First you must have tax basis
• Second you must be at-risk
• Third you must have passive income if the activity is considered passive.  If no passive income then the losses are suspended, as is the case in your facts.

As a partner in a partnership, you should be tracking your basis in your investment.

You would be able to utilize your suspended losses only to the extent that you have basis.  Any suspended losses in excess of your basis would be lost.

So the key for you is hopefully you know your basis.

[CD46]

Still confused on the recording of net rental loss (box 2) on my K-1 I just received.  Property is a SFR condo unit being rented which I own 25% and was acquired in 2021.  Property does not require special handling for real estate and all of my investment activity is at risk.  The person preparing the K-1 reflects it as passive income and checked box 20 (Z stmt) which included statement A and disclosed the same rental loss and UBIA value of qualified property which greatly exceeds the tax loss.   In using Turbo Tax and answering the questions, I am getting no tax benefit of the loss to reduce my taxable income.  Any thoughts?  Thanks   

[AliciaP1]

Passive activity losses can only offset passive activity income.  Since you acquired this property in 2021 and have Rental losses, these will be carryovers to 2022 instead of impacting your 2021 return.  If you have income from the property in 2022 the losses will offset the income up to $0 and any remaining loss will carryover to 2023.  If you have additional losses in 2022, these will add to the carryover to 2023.

If you still have carryover losses on your return when you dispose of the property, the loss will be recognized against the disposition up to certain limitations.

Please see Passive Activities for more information and additional links.

@CD46