I am assuming IRS Form 8832 was filed for a Partnership or Multi-Member LLC to be "treated like a C-Corp" for tax purposes only. Let me reiterate that. *FOR* *TAX* *PURPOSES* *ONLY*. This is important to understand!
So what you do "on paper" with the 1065 and 1120 are not "conversions" per-se.
I should be able to recognize the passive losses in 2019.
No. Nothing was sold in 2019.
You should have two K-1's. First, you should have a "final" k-1 from the 1065 partnership, and your first K-1 from the 1120 C-Corp. The "final" box should be checked on the 1065 K-1. Then I would expect that 1065 K-1 to show a distribution of assets and capital to you.
Next, the 1120 K-1 should show a capital contribution from you, of the capital and assets that were distributed to you on the 1065 K-1.
Therefore, nothing was sold. So there's no recapture of depreciation (if applicable) and no realization of any losses. All losses, depreciation, assets and capital is transferred from the Partnership to the C-Corp, and you're just a "pass through entity" for that transfer since you have a stake in both the old partnership and the new C-Corp.
