Are k1 partnership losses (box 1 ordinary loss) deductible?

[fergynow]

I have a net loss from 2 k-1's under ordinary business income (box 1).  I've entered all of the K1 information in Turbotax but do not see a tax benefit from the loss.  Is it not flowing through Turbotax properly? or is it not a tax benefit?

[Rick19744]

Are you passive or an active participant?
Do you have other K-1's?
If "yes" are you active or passive in those other K-1 activities?

[fergynow]

we have 2 k1's, are passive in both.  the sum of the 2 is a net loss.  so I'm guessing losses offset gains.  but are the excess losses carried forward to next year?

[Rick19744 · Accepted solution]

Based on your follow-up facts, here are my comments:

1. Passive activity losses can only be taken to the extent that you have (1) tax basis, (2) at-risk basis, and (3) passive activity income.
2. The way this will work is that if you have passive activity losses and no passive activity income, the losses will be suspended; no current year tax benefit.  These losses will be carried forward indefinitely until you liquidate your investment.  These carried forward losses will be reflected on form 8582 and the worksheets accompanying that form.
3. If you do have passive income in a year, any current or carried forward passive activity losses will offset that income.  The income can be offset by any passive activity.  TT will be able to handle this computation.
4. There are exceptions to the above general rule for (1) rental real estate and (2) publicly traded partnerships (PTPs)

[fergynow]

Unless is was there and I missed it, I would recommend TT add an info. screen when passive losses are entered to indicate possible carryforward.  thanks for your assistance!

[Rick19744]

Welcome