Buy into partnership, Passive losses through the years, Selling all shares.

[Landymore]

I bought shares in a partnership.

I have passive losses through the years.

And I am carrying passive losses on form 8582 - called Passive Activity Loss Limitation form  

This year I am selling all shares.

How does this transaction get reported on 1040 tax return?

Do I use Form 8949 and Form 8582?

Form 8949 called Sales & Other Dispositions of Capital Assets.

Form 8582 called Passive Activity Loss Limitation.

My thoughts: On Form 8949, I enter the cost basis and sales price. = gain/loss.

My thoughts: On Form 8582, I enter the total passive losses number.

Is there anything else I need to be considering with this transaction?

Thank you for your time, assistance and kindness answering my above questions. 

[Anonymous_]

Have you been using TurboTax throughout?

If so, the program will transfer in your suspended passive losses automatically.

[Landymore]

Yes, I am using TurboTax.

I am concerned with the taxes that will happen next year. 

How will this sale be accounted for on the 1040?

Buy is 160, passive losses is 70, the sales price is 25.

Form 8949 "Sales & Other Dispositions of Capital Assets"

Form 8582 "Passive Activity Loss Limitation"

What is the answer for Form 8949 and Form 8582?

[Mike9241]

selling all your partnership units to an unrelated party will free up the passive losses. they'll show up on schedule E. as to the sale of the partnership interest, you may have paid $160 originally but that is almost certainly is not your tax basis. in a partnership you start with your investment as your tax basis. it goes up with items of income on the k-1 and down by losses, deductions and distributions.  By law your 2023 k-1 should start out with your tax basis at the end of 2022 beginning of 2023. Look at schedule L there is a line that says current year net income (loss) if income add to beginning tax basis if loss subtract. also subtract distributions on line 19 in Part III of the k-1. this should be your tax basis. when you say you're selling your units, I assume the sale is to an unrelated party and thus the k-1 will not reflect the $25 sales price. 

if this is a publicly traded partnership special handling of the sale is required so the sale is not duplicated on the 1099-B which won't have your correct tax basis and the k-1 sales schedule. 

this is from IRC 469 which deal with your passive losses.

(A)In general
If all gain or loss realized on such disposition is recognized, the excess of—
(i)any loss from such activity for such taxable year (determined after the application of subsection (b)), over
(ii)any net income or gain for such taxable year from all other passive activities (determined after the application of subsection (b)),
shall be treated as a loss which is not from a passive activity.

Turbotax will handle this provide paragraph B (below) doesn't apply

(B)Subparagraph (A) not to apply to disposition involving related party
If the taxpayer and the person acquiring the interest bear a relationship to each other described in section 267(b) or section 707(b)(1), then subparagraph (A) shall not apply to any loss of the taxpayer until the taxable year in which such interest is acquired (in a transaction described in subparagraph (A)) by another person who does not bear such a relationship to the tax­payer.