K-1 from 1065 line 20 showing Z* STMT

[curt504]

Hi, I don't know the exact info/error messages but I'll guess you have >$25k in losses AND you have not declared you quallify for Real Estate Pro, REP, which allows no limits in current year loss against other forms of income.   Do nothing and this years losses will roll over till the future, year after year.

FWIW I would easily qualify for REP but choose not to claim it.  Long story why I would not ever claim REP.  Short of it is;  if y9ou are audited you will get a finer combing, screwing, since you claim with REP to be "professional" with all that infers.    IE do you 1099 all your contractors?  DOH!!!

You might find it odd for me to say as a long time REI'er and TT'er that if you aren't an expert in RE taxes you probably should be using a CPA for a year or two and only then use TT.    Buy those biggerpockets tax books asap is my tip.   Good luck.

[Anonymous_]

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@Munzer1 wrote:

....So, I do not get to deduct any depreciation in my form 1040. Is this normal.....

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It is normal.

Again, depreciation (in your case) is deducted at the partnership level. Your K-1 is reporting net income (or loss).

[DLE]

Your latest questions are tax code related and not TT specific.  If you don't understand passive/active losses and limits, and how partnership income/expense is reported on a 1065 and flows down to members through a K-1, you REALLY  should hire a tax attorney and CPA to help you.  After a year or two, you should understand well enough to once again do your own taxes.

But in the meantime, have you entered ALL k-1's?  You might have other partnerships that actually made passive $ and your loss should offset some of this $.

[Munzer1]

My question has nothing to do with tax law or CPA. It has to do why Turbo Tax (TT) is not populating form 1040?

Yes, I have entered all K-1 in Turbo Tax. TT automatically populated those in 8995, 8582 and in Schedule E page 2. TT is not showing page 1 of 8582. Most importantly TT is not showing any depreciation, nor deduction from my real estate depreciation on Form 1040. What line number of form 1040 it supposed to show the depreciation or loss from multifamily real estate, multi partners LLC?

[Munzer1]

All I have is depreciation, no profit, in ALL K-1 but TT is populating 1040 given the all the K-1 I already entered.

[DLE]

I'll try to limit my reply to your questions...

Depreciation from LLC/Multi-member partnership (LLC/MMP) rental property WILL NOT APPEAR on Form 1040 but will instead appear on Form 8825 which is filed with Form 1065 for the LLC/MMP (you likely will never see this form unless you are preparing and filing the LLC/MMP's Form 1065 return return yourself).  The LLC/MMP sends you a K-1 with net income or net loss, after taking depreciation as an expense.  That's all you get.  This net income or loss shows up on Schedule E, Part II, Line 28.

Depreciation from PERSONALLY-owned (not in an LLC /MMP) rental property would appear on Schedule E, Part I, line 18, with supporting forms/schedules.  But you said property is in an LLC/MMP so this doesn't apply to your situation.

[Munzer1]

Thank you so much for staying to the point. You are great.

You are correct, I do not individually own any property just by myself but with syndicators (GP)  and along with dozens of other investors (LPs). So, yes, let's stay in in my scenarios.

If something is not reflected back on 1040 then my tax will be unaffected, correct?

So, what is the point for filling up K-1 in TT?

Would I, as LP, not be able to take any tax advantage for the  depreciation or losses of the real estate property? 

[DLE]

If I follow your first question correctly, Yes your taxes are based on amount reported on Line 15 Form 1040.  This amount would include income (and allowable losses, if any) from all sources as detailed on Schedule 1 and its various supporting forms and schedules.  In your case, as an LP who did not actively/materially participate in the LLC/MMP rental business, your passive activity loss is limited to your passive activity income, in your case ZERO.

Now for the second question, it "feels" as if entering K-1 amounts is a waste of time.  But not so.  First its required.  More importantly, your currently unallowed passive activity losses carry over year to year until you have passive activity income to offset the losses.  Also, losses from one passive activity can be used to offset gains from another activity.

And finally for the third question... this question is why I previously suggested you might want to seek support from a tax professional.  Hopefully you had cash or property distributions and you certainly benefited from that.

[Munzer1]

1) You wrote: Now for the second question, it "feels" as if entering K-1 amounts is a waste of time.  But not so.  First its required. "

Could I not postpone K-1 entry until the time of the first disposition of one of my property?

2) You wrote: "More importantly, your currently unallowed passive activity losses carry over year to year until you have passive activity income to offset the losses."

Same, Could I not postpone this until I see a net profit?

3) You wrote: "Also, losses from one passive activity can be used to offset gains from another activity."

I do not have any net profit/gain from any of my real estate property yet.

In addition, why TT doesn't not allow me to offset my other passive income through nor real estate activities with the real estate depreciation/losses as shown in K-1 as of today?

Since TT is not transferring the net depreciation and losses from the K-1 to 1040 I can't offset my other passive  income that comes through non real estate activity.

[Munzer1]

4) you wrote: " In your case, as an LP who did not actively/materially participate in the LLC/MMP rental business, your passive activity loss is limited to your passive activity income, in your case ZERO."

Does TT add ALL depreciation and all loses from my dozens of K-1 behind the scene and if there were any positive number (net profit) then it would have automatically populated that as income on form 1040? For now, since the net of dozen of K-1 is still negative (loss) TT is not populating anything on form 1040. Maybe TT is computing behind the scene and just carry forward the depreciation and losses to the next year since it is still negative (loss), is that Correct?

I just want to make sure that TT is adding all K-1 and then deciding to populate the 1040 or not. There is no indication of that. There is no way a user to know that. There is no message about this from TT.

[DLE]

I thought you said you had only one K-1.  If you have other K-1's, and these other K-1's are not from rental real estate activities, then you must have one or more business activities and I THINK you should be using TT Home and Business or TT Business.  So I suppose it is possible TT Deluxe Download version is not able to capture your non rental real estate business activities.  But not sure as I have not used TT Deluxe before.  I have nothing else useful to add.

Good luck...

[Anonymous_]

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@DLE wrote:

....you must have one or more business activities and I THINK you should be using TT Home and Business or TT Business. 

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Regardless of how many K-1s @Munzer1 has to enter, TurboTax Business is not necessary unless @Munzer1 is preparing the 1065 and related K-1s.

In fact, @Munzer1 can use any desktop version of TurboTax to enter the K-1 information. If using an online version, however, @Munzer1 would have to use TurboTax Premier or Self-Employed.

[Munzer1]

I am not using TT Business version. I am using TT Delux desk top version.

My question remains about what TT is computing using K-1 data and what is not. Please see my previous 4 numbered questions.

[Anonymous_]

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@Munzer1 wrote:

My question remains about what TT is computing using K-1 data and what is not. Please see my previous 4 numbered questions.

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Your questions have essentially been answered, it is simply that you are not comprehending those answers. 

You need to consult, in person, with a tax professional who can walk you through this process step by step, explain it to you as you go along, and answer any questions you might have on the spot.

[Munzer1]

How the following questions are answer?

Does TT calculate, add ALL depreciation and all loses from my dozens of K-1 behind the scene and if there were any positive number (net profit) then it would have automatically populated that as income on form 1040?

Is this what TT does?

For now, since the sum of dozen of K-1 is still negative (loss) TT is not populating anything on form 1040. Maybe TT is computing behind the scene and just carry forward the depreciation and losses to the next year on Form 4562, 8582, E, and 8995, since it is still negative (loss), is that Correct?

Would TT ever populate form 1040 if and when all K-1 put together shows net gain?

I just want to make sure that TT is adding all K-1 and then deciding to populate the 1040 or not. There is no indication of that. There is no way a user to know that. There is no message about this from TT.