when you indicate final k-1, total disposition and enter the ordinary income recapture, if any, in the K-1 sales section, Turbotax shouldd allow as a deduction all its passive loss carryovers (each PTP stands on its own so only that PTP's suspended losses will be allowed. in addition, there are probably QBI loss carryforwards that will now flow to the QBI deduction form.
However, if the cumulative adjustment to basis shown on the sales schedule includes passive activity losses carried over from prior years, shouldn't I delete them from Turbotax so as to not double count them? Or, alternatively, subtract them from the adjusted basis I sub into the 1099-B?
no.
consider these examples
example 1
bought for $5000
suspended losses not deducted $3000 (cumulative adjustment to basis)
tax basis now $2000
you sell for $2000
thus no capital gain or loss
wouldn't you now want that $3000 deduction to reflect that you actually paid $5000 and now only have $2000
example 2
bought for $10000
received $2000 in distributions
suspended losses not deducted $7000
cumulative adjustments to basis $9000 (the $2K + the $7k)
tax basis now $1000
sell for $1000
wouldn't you now want that $7000 deduction to reflect you paid $10000 but received only $3000 (sales proceeds and distributions)
example 3
bought for $15000
received $3000 in distributions
suspended losses not deducted $7000
cumulative adjustments to basis $10000 (the $3K + the $7k)
tax basis before ordinary income recapture $5000
ordinary income recapture $1000
tax basis now $6000
sell for $6000
wouldn't you now want that $7000 deduction to reflect you paid $15000 received $9000 (sales proceeds and distributions) and have to report $1000 as ordinary income making the net for the year a $6000 loss
I should add that in the final example that ordinary income recapture is QBI income - report on the qbi line for other income/(loss) its not included in 20Z on the actual k-1
