I have a schedule K-1 LLC. What do I put for carryovers for "Box 2a"? Do I put my passive activity losses from last year or leave blank as this is not "ordinary income"?

[Leashy312]

The LLC is organized as a partnership. The schedule K1 I have is for real estate, and thus does not have a 'Box 2a.' In the screen(s) for regular tax (and AMT) carryovers for my passive loss ("Report Carryovers - Regular Tax"), TurboTax lists "Box 2a - ordinary income" NOT "Box 2 - Net real estate income". Should I put in my passive loss from last year in Box 2a or leave this blank as the passive loss is not ordinary income? To be clear, the only box (in Part III) with any value on my K1 from last year is Box 2, which lists my passive activity loss.

[PatriciaV · Accepted solution]

Yes, enter the amount as a negative number in the space for Box 2. Letter (a) for Box 2 is for Ordinary Income from Recoveries, but as a suspended passive loss. The loss retains its character as passive income to be applied to "ordinary" rental income in the future. There is no other place to report this passive loss carryover.

[Leashy312]

Thank you for the clarification!

[couryj]

What if you have a passive loss in box 1 & 2? Since that's the case TT has you make two K-1s - one with everything but box 2 - and everything except box 2.  In that case, would I enter the carryover loss from Real Estate activity in first K-1 (everything but box 2) or the second K-1 (just box 2). In short, are all my carryover losses to be entered on the same K1 (the K1 with everything but box 2) or should the Real Estate carryover loss be entered in the K1 where I entered in the current year's box 2 income/loss? Thank you!

[migdalskiy]

What Form do the terms "Box 1" and "Box 2a" refer to?

If it's the corresponding boxes on K-1: Box 1 for ordinary income(loss) and Box 2 for Net real estate income(loss), it seems impossible to allocate the carryover loss between them because on Form 8285 Worksheet 6 column (b) from prior year all those losses from multiple previous years are summed up as one number. 

How are we supposed to know how to allocate losses between Box 1 and Box 2a?
What do the "Box 1" and "Box 2a" refer to? It would help to know.

[misstorrie007]

Is this correct even if you have two schedule K-1(s) for the same LLC?

[kanc]

What does the Box 1 and Box 2a correspond to? Was there a response to this ? I am faced with the same issue

[ThomasM125]

I'm not sure why there are two entries for your passive loss carryover from the previous year. You use part V and VI on your prior year Form 8582 Passive Activity Loss Limitations to determine your loss carryover for the current year. If you enter that amount in either the Box 1 or Box 2(a) entry in TurboTax, it will show in Part V of form 8582 in column (c) Prior Years Unallowed Loss and you will get credit in the current year for your prior year loss carryover.

@kanc

[jnbrendel]

What I am seeing when I enter my prior year suspended passive loss from rental real estate activity in the Box 2a, is that it gets doubled up. The loss was netted against current year income and shown on Line 1a of Section A as current year gain or loss from ordinary income, and then the entire amount of the loss carryforward is shown again on Line 2a as "ordinary income from recoveries.  In Column D, the total loss suspended for the current year amount adds the prior year carryforward to the current year net amount (after applying the carryforward), overstating the current year loss carryforward.

[PatriciaV]

You may need to review your entries for Passive Loss Carryovers to confirm that you did not enter the amount twice. The amount on K-1 Section A Line 1a column (b) is reported in the net income/loss from this investment on Schedule E pg2 Part II Line 28. The amount on Line 2a column (b) is reported on Form 1040 Schedule 1 Line 8z.

If you're unable to locate the source of the number on Line 1a(b), you may delete it from the form on all lines where it appears (using Forms Mode in TurboTax for Desktop).

@jnbrendel