I have a rental property that generated Passive Activity Loss (PAL) of 4k in 2017 (form 8582). Since I'm not actively involved, it's unallowed loss and got carried over.
In 2018, I rented it for couple of month, then sold it. The rental itself generate another PAL of $1k. The sale generated gain of $4k (sale price - purchase price + depreciation - cost on form 4797).
I learned when filing 2018 tax return, I can deduct all carryover loss, but don't know how. Is it on 8582 or 4797 or somewhere else? Which line? I tried using Worksheet 3 on 8582, it turned out disallowed. Should I use worksheet 1 instead since this is related to sale of the property?
Thanks for your help.
