@Taxpayer40 from the 1041 instructions
Gains or losses from the complete or partial disposition of
a rental, rental real estate, or trade or business activity that is
a passive activity must be shown on an attachment to
Schedule K-1. to me this would only make sense if the gain/loss was to be treated as passive.
so probably showing it on 4a was wrong but then there would also be the issue of section 1250 recapture.
i tested Turbotax by entering rental real estate on schedule E and sold at a gain - total disposition. also enter another non real estate passive activuity loss (200,000) partnership business - no disposal. turbotax handled this as per the reg 1.409-2(T). gain on bldg including deprecition recapture $164,166, land gain $25,000, current year profit $20,417, PAL c/o $50000. the 8582 showed the 164,166+25000+20417 = 209,583 on line 2a. the 200,000 loss on line 2b and the 50,000 PAL c/o of 50,000 on 2c. Since the net is a negative $40.417 this ws disallowed
the returns forms and schedules showed the following Schedule D $189,166 (bldg + land gain)
schedule E page 1 $-29,583 current year profit offset the PAL c/o
schedule E page 2 partnership $-159,583
thus the net reported was $0
evidently Turbotax there is noway Turbotax can handle the trust reporting properly.
either that or Turbotax is not correctly handling the real estate reporing in the retunr i did becuase it inluded the capital gain as passive
I'll offer a work around at your own risk
create a partnership k-1 using trust name an ID #
om 11i enter the capital gain
then in the subschedule you enter it at non-portfolio LTCG . this will carry the amount to the 8582 as passsive
you would also enter the section 1250 gain on the k-1 - 9c
and then in the subschedule for 9c on line 2 - this is needed so 1250 gain is properly reported
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if there is no 1250 gain on your k-1 then I question whther the property was a passive activity rather than an investment.
