I receive a k-1 from an estate which historically had rental income from renting a building which has always been treated as passive income-and turbo tax treated properly.. The building was sold in 2022 by estate and the capital gain was reported on the k-1 (Form 1041) line 4a. This was capital gain from selling a rental property. (The trust is allowed to pass out Cap Gain as the trustee distributed all the proceeds to the 4 owners and intended for the gain to be taxed to beneficiary of the trust)
Turb Tax refuses to allow me to identify this as rental related - it changes the type of activity to "other" - II have other passive losses that will offset the passive gain- clearly the gain is passive under 469 and just because capital gain does not mean it is not passive. Anyway there does not seem to be a way to override the amount of passive income on the 8582. I would like to get the benefit of the capital gain rates. I changed to reporting the gain as "Net Rental real estate income" line 7 of the k-1 and it then works properly as passive income- but I lose the benefit of cap gains rate ( and probably an IRS notice for not following the k-1) Any help would be appreciated.
JIm
