Good point about REITs, I'll keep that in mind. But I meant non REIT real estate partnerships in the form of an LLC or an LP. For example, I'm actually invested in one, where I'm a limited partner, that bought 10 single family houses and is currently sitting on them for rental income. The vast majority of income is box 2 net rental real estate income. I just tested increasing that box2 amount in TurboTax in the the return where I have lots of PAL carryovers and indeed that box 2 income does offset PALs. It seems a requirement though is that you don't actively participate in the partnership otherwise that box 2 income becomes ordinary. Materially participating but not actively somehow still keeps the gain as passive. Go figure.
One of the houses was sold last year and that generated a combo of box 9c "unrecaptured section 1250 gain" and box 10 "net section 1231 gain." I'm still playing around with how these affect AGI and PAL carryovers as it seems more complicated so far. I'll update this thread with what I find later in case it helps someone.
Btw tagteam, you are very knowledgably about taxes. Are a professional tax preparer or a just tax enthusiast? : ) I appreciate your help very much!
