Deductions & credits

Your post is somewhat confusing in the sense that you would not expect to see Form 4797 in a previous year unless you disposed of business property (which would ordinarily include rental property).

 

Also, non-recaptured 1231 losses are net 1231 losses for the prior five years that have not been applied against any 1231 gains. If you had any 1231 losses in the prior five years, then any 1231 gains are ordinary gains to the extent of your 1231 losses in those prior five years.

 

Suspended (disallowed) passive activity losses are released upon a disposition of that activity to an unrelated third party in a fully taxable transaction. If you sold a rental in 2019, then all of the previously disallowed losses are released which may result in an NOL (net operating loss) for the year of the sale.

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