I am a limited partner in multiple passive real estate investments. Each of these partnerships is involved in real estate activities like multifamily development and operation, self-storage units, etc. Each of them is a separate entity that sends a separate K-1. I have accumulated losses of ~$50k over the past several years that are spread across these multiple investments. In 2024, one of the investments (let's call it "ABC") was fully dispositioned and resulted in a 1231 gain. TurboTax is releasing the entire unallowed accumulated losses from all investments to offset both passive and active income.
Reading the IRS rules, I understand that only accumulated losses from "ABC" can be released to offset both passive and active income. Why is TurboTax releasing accumulated losses from all investments? Is this correct? If not, how do I fix it?
I guess I figured it out. TT is only offsetting passive income from "ABC" using passive losses (including accumulated) from all investments which is allowable per the IRS rules unless someone suggests otherwise.
@user17524270358 wrote:I guess I figured it out. TT is only offsetting passive income from "ABC" using passive losses (including accumulated) from all investments
That is correct. Passive loss carryovers can be used to the extent of passive income. Because the one investment was sold at a gain, you have income from that passive activity, so the other passive losses can be up to that income.