Using turbo tax for first time - I have previous year PAL carryforwards, how to record?

[mlemaire87]

I'm transitioning to doing my own taxes in turbo tax, so I don't have anything to roll forward from previous years. My accountant used to prepare a long list of passive loss carryforwards.. I checked the "I have passive activity losses carried over from last year" box about this LLC but the fields are one entry per type of loss (regular tax and AMT).

• I assume that's where I'm supposed to enter the allowed passive losses to pair against my passive income for this year only (2023)?
• If so, where/how in Turbotax do I create the long list of disallowed losses to be used in the future? 

[marctu]

I am going to answer this question, while making some assumption based upon what you wrote.  I am assuming the LLC is related to a rental property or properties, which is filed on Schedule E.   The first question is yes; you would enter the passive losses for this activity only after you checked the "I have passive activity losses carried over from last year" box.  

So if this is an LLC that has rental properties, the passive activity losses are the disallowed losses.  A quick Google search shows these as being used interchangeably.  This is the general rule:

If you don't qualify for the real estate professional designation can claim losses of up to $25,000 on their rental properties. Losses are income-dependent and are disallowed if you report more than $150,000 in modified gross adjusted income. 

The loss disallowance rule is a rule created by the IRS that prevents a consolidated group or business conglomerate from filing a single tax return on behalf of its subsidiaries in order to claim a tax deduction for losses on the value of the subsidiary's stock, though that does not appear to be what you are talking about.  

You can also have passive activity losses on this sheet associated with an activity generally associated with a partnership.  They would be entered in the K-1. 

If there is a follow up to this please ask.

Thank you for the opportunity to answer your questions @mlemaire87 

All the best,

Marc T.

TurboTax Live Tax Expert

[mlemaire87]

Hi Marc, 

I want to clarify - checking the box and filling out the Passive Activity Losses Carried Over From Last Year data fields will do which thing - 

1. Pair those losses against any passive income earned in 2023?
2. Or - push them through to become a 2023 carryforward to be used against 2024 passive income?

Also, what if the passive loss carryforwards from prior years are much larger than the passive income just this year (2023) - where do I generate the historical list of passive loss carryforwards to use in future years?

[dev145]

Hi, 

Once you enter prior year carry over passive losses, TurboTax will automatically apply passive income from this year to carryovers and if there are still carryovers left, it will report them properly as carry forwards and  if you use TurboTax next year, info. will be imported automatically. You will not have enter them again next year.

Hope this is helpful. 

Regards,

TurboTax Expert