Did you look at the 1040 itself?
The full gain is taxable, but the suspended passive loss from the sold property should be released. These 2 figures do not offset each other directly on the same line of the tax return.
- The suspended loss (c $15,000) would be on Form 1040, line 17
- The gain would be on Line 13 (and 14) of the 1040
Passive losses on the property that you still have are not "unsuspended" until you dispose of the property. You can use these losses to offset other passive income (i.e. Schedule E income, perhaps some Partnership income), but you cannot use it to offset the capital gain.
Did you rent the property in 2016 prior to selling it? Even if you didn't, the best place to dispose of the property in Turbo Tax might be there. Going through the screens below helps that suspended loss be released.
Inside the Schedule E rental section for the disposed property, you see a screen "Do Any of These Situations Apply to the Property?" :
-Is the box disposed of checked?
-Is the box I have passive losses carried over.... checked?
(You mentioned doing these things.... but we also list information for other future readers. It does seem like you reported everything correctly, but may need to take a closer look at the results)
Also:
-On the next screen (inside the rental section), is the passive loss carryover entered as a negative figure?
-What do you see on the Schedule E? Is the other property showing a gain for this year?
** A $4000 change isn't impossible if your income is already >$125k. You have $20k gain at (mostly) ordinary tax rate due to depreciation recapture, less $15k. So, simplistically speaking, that's say $5k of ordinary income. The additional income is not only taxed, but also may impact your deductions, credits, and other calculations which are based on AGI. That could easily add $4000, as crazy as that might seem.
Please review my comments vs your entries, and report back with any questions, comments, etc.
(I ran through the scenario in the 2016 program, and the losses were released simply by clicking the disposed of button and entering the Passive carryovers)
