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For Tax Year 2023, I am a limited partner in Partnership A whose only asset is a limited partnership interest in Partnership B. Partnership B has/had only two activities...a vacant lot and a large commercial development project. Partnership B could no longer fund the cash needs of the development project and sold it to the project lender at a loss in 2023. The purchase price was the outstanding loan balance. My K-1 for 2023 from Partnership A includes a 1231 loss on line 10 of 120,000. My tax advisor assures me that the 1231 loss can be recognized in 2023 and is not a passive loss because the activity was disposed of by Partnership B. Turbotax Premier has no provision to recognize this loss currently and carries it over to future periods.
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