4797 loss should be carrying forward?

I feel like I have checked a box wrong somewhere.  In 2021, I sold a commercial real estate building at a loss.  I thought I was told that the 1231 loss couldn't be used against passive real estate income, so it would carry forward until I sold something with a gain.  But it IS offsetting schedule E/K1 passive rental income.   Should it be, or not?  TT doesn't seem to change anything when I click the active/material/passive exclusion buttons so I want to make sure it's working as it should.

 

Thanks

update: I found the old post and the person replying first said the loss could only be used when my interest in the Partnership that owned the building was disposed of, but then corrected himself and said it would offset Passive Income.  So I think it's doing what it's supposed to.  Is there any combination of non-active and non-material participation which would make it NOT use up the loss?