Actually TurboTax seems to have a bug in handling selling rental property vs handling other K-1 passive losses/carryforward losses. If one enters the rental property sale under Rental section, it will take you through Form 4797 and then Schedule D, and the net gain of $8k (rental sale net gain $10k minus stock losses $2k) is included in Line 7 on Form 1040. This is correct. However, it will also activate K-1 passive carryforward losses for other partnerships and transfer a negative number, i.e., -10k (to Schedule 1 and then to Line 8 on Form 1040. This must be wrong as TurboTax tries to offset the rental sale gain twice.
However, if one enters the rental property sale under Business property section, it will only take you through Form 4797 and then Schedule D, and the net gain $8k is included in Line 7 on Form 1040. It does activate the passive carryforward losses for the rental property (not K-1 passive carryforward losses for other partnerships) and transfer a negative number, say $1k to Schedule 1 and then to Line 8 on Form 1040. This seems to be right.
Can anyone from TurboTax explain? Thanks.
