If the K1 I received shows a loss, do I need to enter it in this years tax return or wait until I sell the units or get positive activity in a future year?

Why won't turbo tax allow me to file this loss with a IRA I2 block checked?

Yes, you should enter the K-1 on your tax return even if it shows a loss.

It is a passive loss. The instructions mean that you are not allowed to deduct this loss from your other income. They are suspended to be used when you have a passive profit or when you sell the units. You cannot use the loss in the future if you do not report it this year.

Why won't turbo tax allow me to file this loss with a IRA I2 block checked? Is there a way to override?

I have a similar situation, I was given a k-1 for a loss/deduction, on preparation/sale of a small amount of inheritance from property sold with a note that says "for tax year ending may 31st 2019" and told to file with 2019 tax, but on closer inspection it's a 2018 k-1 form. Do I file this with 2018 or 2019, and since I don't report the inheritance as income, does it matter anyways since you said it can't reduce other income..

I am looking for  the code section, treas reg or any authority whatsoever for the statement "You cannot use the loss in the future if you do not report it this year." Any assistance would be appreciated.  

I missed to enter my K1 (loss) on 2019 return. Is there a way for me to reflect that passive loss carry over on my 2020 return directly, or do I need to amend my 2019 return. 

Since it is a loss, there would be no tax implication as far as my 2019 return is concerned. 

@NS14 You should amend your 2019 to show how you got the carryover. However, you are allowed up to $3,000 in passive losses as an offset to income. Unless you have already used it, you could have a reduction in taxable income for 2019. Which would mean a refund.

Amy,

   Aren't you talking about $3000 in Capital Losses?

Hello what if losses are reported on the k-1 sche, but on the tax summary for this year it is showing zero losses for last year. so basically its not showing accurate information and not allowing the corrections to be added under the the update button. What can be done about that. _K-1 schedule not allocating- premier_

Can you clarify where on the K-1 the losses are and what you expected for last year?  You've posted in an old thread so it's not completely clear what you're trying to do.

@THorn WSOL 

This  community page is not always letting me log in but. the k1 losses being reported i believe is rental/real estate losses. on there previous year the losses show for 2020 and 2021. but this year it shows the same loss for 2021 and not the current loss of 2022 even though the losses were entered. I thought tt was just not saving it by the time it got to the review. 

It's important to check your Form 8582 from 2021. This shows the current loss from passive activities as well as the ones allowed and those that must be carried over to the next year.  If you did your return with TurboTax then it should have been carried over.  Double check to see if there were any carryover losses by viewing page 1 and other sections of Form 8582. It will show if there is any unallowed loss to carryover.  If there is no carryover from 2021 to 2022, then you simply enter your K1 for 2022.

Passive Activity Phaseout Rule: 

The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income that’s more than $100,000 ($50,000 if you’re married filing separately). If your modified adjusted gross income is $150,000 or more ($75,000 or more if you’re married filing separately), you generally can’t use the special allowance. This is because the special allowance is reduced to $0 since the modified adjusted gross income is over the $100,000 amount.

Here are steps provided by our Tax Expert @DaveF1006 to enter your current year information and any unallowed loss carryovers:

Try this method in your TurboTax Online or TurboTax Desktop account and this should generate your 8582. .

1. Go to Federal (or Personal Income)> Income and Deductions 
2. Scroll to Business Investment and Estate/Trust Income
3. Select Schedule K-1 
4. Select edit net to the K1 you wish to edit.

After you have entered all your information about your K1 and scroll through the information that is in your boxes, there should be a screen that says Describe the Partnership.  Here you will check that: 

1. All of my investment in this activity is at risk and
2. I have at-risk losses carrying over from 2021.
3. The very next screen is titled, Enter Your At-Risk Loss Carryovers on the Form Below. 
4. In the middle of A line 1, put in your losses from a previous year. You may need to enter this twice because the program may not have recorded it the first time it was entered. Make sure you make the entry then click outside the box for it to stick
5. Next you may go to Tax Tools > Tools > Delete a form to verify it is part of your tax file -- Form 8582 should show up. 

@THorn WSOL1 

You are correct. The original return must be amended to include the K1 losses which would then show the carry forward amounts, if any. A return for the current year can be completed correctly so that no amendment would be required for the current year.  Once the amended return is completed for the earlier year, then the correct information can be applied to the current year tax return.

@Tax2019Pay 

Thanks DianeW777 - you are always very helpful!!!

 Although, in your situation, it technically is your loss because if you choose not to use these passive carryover losses from 2019 and not to amend your 2019 return for these losses, consequently, you won't the know the correct amount of these carryover losses to be applied to 2020 either so you you won't use them. Nonetheless, since this K-1 is a form of IRS documentation,it must be accurately accounted for. If down the road the IRS compares this K-1 from the company that issued you the K-1 to your personal tax return and sees that it is missing, it will be sure to cause a red flag.

I am going from my return being prepared by a CPA to doing it myself. I have the prior year  suspended loss amounts for PTPs and I want to enter the prior year amounts. I’m trying to enter the amounts on the K-1 entry form Section A Passive Activity Adjustment to Income or Loss, line 1 (b) Carry over  from prior year and ditto for Section B. Then if I scroll to the bottom QBI worksheet the amounts are shown as “Before 2018” which is not the case! Is there a way to correct to 2021. If no why not?

Yes, you can manually enter the prior year disallowed loss on K-1 Partner Disallowed Passive Losses, Line M (2021). When you make this entry, the value in Line A should change to a zero. Without knowing from what year the loss carried over, TurboTax defaults to the earliest option, before 2018.

@wrc41 

Thank you for your answer but I'm not following your guidance because I'm not sure which form or worksheet you are referencing. On what form does the " K-1 Partner Disallowed Passive Losses, Line M (2021)"  appear?

I can't find it on the Partner's Share of Income, Credits and Deductions (K-1 input data).

I'm sorry TT defaults to showing the Section A Passivity Activity Adjustment to Income or Loss,

Column (b) "Suspended Loss Carryover From Prior year" is treated as "Before 2018" when in my case it for 2021.  The "prior year" to 2022 is 2021.  Heading it is not shown as year(s), 

To make this change you need to be in Forms Mode, which was implied when you said you were able to "scroll to the bottom" of the QBI worksheet. This is available only in TurboTax for Desktop. If you are working in TurboTax Online, you won't be able to change how the suspended loss is entered.

Here are the steps:

1. Open your return and click the Forms icon in the TurboTax header.
2. In the Forms list on the left, find "K-1 Partner" for the PTP you need to edit.
3. Click the form name to open it in the large window.
4. Scroll down to Page 8 (this appears on the right side of the form) and find Disallowed Passive Losses by Year and Type.
5. Enter your 2021 passive loss carryover on Line M, Regular Tax column.
6. The amount shown on Line A should now be zero.
7. When finished, click Step-by-Step in the header to return to the main screens.

@wrc41 

Thank you! My 82 year old eyes were missing the "M" since it was offset from the left side. Not a good excuse but the best I can offer. Should I consider the page 8 section of the K-1 as the location where the cumulative total of losses for previous years is kept each year (which is what the value is that I entered for 2021 (it is the cumulative losses through 2021). The next related question is: Should I also enter the 2021 cumulative total losses in Section A and Section B column (b)? or is that location for some other purpose?

Sure do appreciate your help!

PS Forgot using Desktop, Premier Windows

Yes, your carryovers are reported in this section of the K-1, usually page 8. TurboTax will make the appropriate entries for you, depending on how information is entered during the interview. 

You should not need to make any changes going forward, nor should you make other manual entries in any section of the K-1 Partner form. Instead, complete the K-1 interview using the Step-by-Step process of the TurboTax program, which is designed to capture all necessary information and complete the forms & worksheets accurately.

@wrc41