The losses were reported on the K1's, and the K1 worksheets in TT are doing the calculations about which ones are allowed and which ones continue to carry forward.
Note this is the answer I got in October 2021 when I was using TT to estimate taxes thinking I was selling selling the house that year. I was surprised the losses from selling that property weren't offsetting the gains from selling my house. I was asked if I or the entity owned the property. I answered:
It's a passthrough entity (partnership) and the entity has sold the property. Are you saying the losses must be carried until the entity is dissolved or has a capital gain?
And was told: "Yes. that is the law. until your interest in that partnership is terminated (either by selling your interest or the partnership terminated) or there is a passive capital gain (1231 gain) or even ordinary passive income the 1231 loss remains suspended. if you actively participate, a lower standard than material participation, then up to $25,000 of losses would be allowed if your modified adjusted gross income is less than $150,000. see form 8582."
So what seems to be happening now is the passive 1231 loss is being used against ordinary passive income, so maybe that's what it's supposed to do?
