taxq2020
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Sold Partnership With Passive Activity Carryovers

I sold a partnership interest at a loss. The interest has passive carryover losses. I have the desktop version of TT Deluxe. I know the regular and AMT basis in my partnership interest. I know the loss on the sale of the interest should be reported on schedule D and that the suspended passive carryover losses (box 1 type) should result in an ordinary loss. In the K-1 interview under Describe Partnership I want to indicate that I sold the entire interest. However, the closest choice is 'Disposed of a portion of my interest in partnership' which I selected. Under 'Tell Us About Your Sale' I selected 'Sold Partnership Interest', proceed to inter the Purchas and Sale dates, the sales price and the partnership basis. I also indicate that I have passive activity losses carried over from last year and that all of the investment is at risk. The passive activity losses auto populate as I've used TT for all years of the investment. I note that the partnership is a business independent of any other activities. The result I received was that the loss did not show on Sch D (it added it to passive losses on Form 8582) and the passive losses on the sold partnership did not show as a deduction, but instead as an unallowed loss on worksheet 5 of Form 8582.

What have I missed, what do I need to do differently on TT to show the loss on sale and loss from carryover passive losses due to the complete sale of the interest?

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On the same screen where you indicated that you Disposed of a portion of my interest in partnership also check the box next to This partnership ended in 2020

 

You should then see Complete disposition on the following screen.

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there should also have been questions about this being final k-1 and another that the partner sold or otherwise disposed of their entire interest. both should be checked yes.

 

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@Mike9241 wrote:

there should also have been questions about this being final k-1.....


Final K-1 will be checked (automatically) if the user checks the box next to This partnership ended in 2020.