I leave this thread up as a reminder of my stupidity. Maybe others will benefit. This issue stems from mistakenly identifying an in-Pennsylvania property as not-for-profit, which then disallows losses.
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There appears to be a problem with the TurboTax Pennsylvania Schedule E form calculation, in that it zeroes out any losses without allowing them to offset gains from other properties, even on the same page. This is a longstanding issue, as I see the same behavior in returns from 10 years ago. If this is a bug then it has cost me into the thousands of dollars. I can only file amended returns for the past two years to recover the tax overpayments.
I found and commented on a couple other posts that appear to touch on this behavior, here and here. In each case there's distraction about losses in one category of income not offsetting income in a different category, and the fact that losses don't carry forward. The issue here is that if you have two rental properties then the loss from one should be able to offset the gain from another in the same year. TurboTax is not allowing this. Instead it automatically sets the loss fields to zero for any property showing a loss. If this were somehow intended in the tax code then there would be no point in even having a separate line item for losses. In fact all the loss checkboxes on the form would be unnecessary because it would be impossible to have a loss. Further, the official instructions for Schedule E say nothing about zeroing out losses.
Here are some sample numbers I posted previously, with entries for three properties:
Line 1 Rent received: 8,000 15,000 11,000
Line 18 Total expenses: 7,000 10,000 18,000
Line 19 Income: 1,000 5,000 (blank)
Line 20 Loss: (blank) (blank) 0
That last number should be 7,000, not zero, and the loss box should be checked.
Line 22 should indicate a loss of 1,000, not a gain of 6,000. In this situation TurboTax is improperly increasing taxable income by $6,000. This is distinct from the fact that the correct $1,000 loss cannot offset income from other categories.
I would like either a definitive acknowledgement that this is a bug, or alternatively a concise explanation of why it's not, including references. Because of the dollar amounts at stake I will be pursuing this until I have a full understanding.
@DianeW777
@PattiF
