Hi maclayman,
This is exactly my situation. I am not using Schedule E to report the PAL, but rather Line 8 of 1040 Schedule 1 . Here's what I'm doing (as expressed in my response earlier in this thread, which you should review in full):
I am going to:
1. Declare the sale of the home on Form 4797 -- Sales of Business Property (not Schedule E, since it was not rented in 2020)
2. Declare the released multi-year PAL carryover as regular income and as a negative entry in "Other Income," which I found to be easily entered in the TT "Other and Miscellaneous Income" menu in the Income/Wages tab. This entry shows up on Line 8 of 1040 Schedule 1 verbatim.
3. I note in the instructions for Form 8582 (used to carry over PAL year to year), in the year of dispositioning a previous passive activity, if all of the carryover can be used (which it can in 2020) there is no need to file 8582 again in that year, so big relief there. No need to figure out how to generate a 2020 8582 in TT!
Good luck!
golies
