if you don't report the passive losses each year, then down the road when you sell in 10 years, you may not be able to claim passive losses you incurred in closed years. also, in the future, you may have passive income, then unless you want to pay taxes on the, you would need to report prior passive losses. just entering them for that year, could substantially increase you audit risk. aif the pAL is from rental real estate, if in some year your AGI is below $150,000 some of those passive losses would be allowed. Finally, what future tax laws will hold is unknown, so I would advise proper reporting of the k-1 results each year.
