Rental real estate: I initially had checked Active Participation for all three properties (the two still held and the one sold), but I also unchecked it on all of them, and didn't see a change. I then tried checking material participation (though I do not qualify for this, I just wanted to see if it changed anything) and still did not see a change.
The real estate activities are not aggregated - they are in separate columns of Schedule E.
For the K-1, I checked "Limited Partner or Other LLC Member" -> Domestic Partner -> nothing for the percentage of share, liability share, or Capital Account information because I'm not sure what that would be. I said I do NOT materially participate. I checked "None of these apply" for the "Describe the Partnership" section, Business - Box 1, Not an oil or gas property, and entered the negative number for Box 1 - Ordinary income or loss. I checked "All is at risk" and "No" code Z in Box 20, and no Schedule Q.
I tried reporting the sale as a Sale of Business Property on 4797, and I also tried reporting it through the "wizard" the runs through the Schedule E in the checkbox asking if the property was sold.
The resulting 8582 form is no longer listing the sold property on the form, so I assume that the suspended passive losses for that property are being taken into account to offset the portion that they would offset, but, the K-1 and the other investment property are still listed. The bottom of the form is saying that the allocation of unallowed losses is .007 for the investment property and .92 for the K-1 loss, such that the vast majority of the losses is listed as "Unallowed"
I am very confused by this, because I have seen countless references stating that in the year of selling one rental property, the suspended passive losses of the other rental properties should be released and offset against the capital gains. And if that's the case, it seems like the K-1 losses should do the same. But neither of them are. If I delete the K-1 sample entirely from the tax return, the same issue remains for the suspended passive losses from the rental property - they're not getting released.
Thank you for your help with this. I'm stumped.
