This question is in regard to Form 4797. I own units of a publicly traded partnership and I have entered all boxes from the K-1 into TurboTax. Box 10 (Sec 1231) shows a loss and this is a passive loss that must be reported on Form 4797 Part 1. It is not ordinary income (loss), and Line 7 from 4797 adds the passive loss to the Carryover Worksheet as it should. I have observed that on Form 4797, TurboTax takes the loss from Part 1 and populates Part 2. I do not have a Sec 1231 gain to use the loss (and carried over losses) to net against the gain. There is no gain, but since TurboTax has populated Part 2, the loss flows up to my 1040. I do not believe that should happen because Sec 1231 losses are passive and cannot be deducted in the current year. Is there a way to get TurboTax to record a loss in Form 4797 Part 1 without populating Part 2? Or have I misunderstood the Sec 1231 rules?
