Yes, if you have suspended losses for California and you have sold all of your shares in the MLPs, any suspended losses for California are deductible.
Three criteria must be met before losses are deductible against non-passive income:
- It requires that the taxpayer dispose of an entire interest in a fully taxable transaction to an unrelated party.
- All gain realized must be recognized.
- Therefore, in an exchange of the taxpayer's interest, such as a 1031 exchange in which no gain or loss is recognized, suspended passive losses are not deductible.
@rrw2012
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