Can I use form 8582-CR to increase the basis of my rental property that I disposed of (which had unused losses)? I cannot figure out how to do this in the tool.

[bakersfieldtax]

I have loss carryforwards from renting the property in past years, and disposed of the property this year.  I would like to use the unallowed losses to increase the basis of the property.

[Carl]

Doesn't quite work that way. Your carry forwards as you know, can only be taken against passive income. But in the year you sell the property those passive losses can also be taken against other ordinary income. If you report the sale property in the SCH E section of the program, then the program will take care of all this for you.

Your losses from other income is limited to a max of $3000 a year (depending on your AGI).

Any more than that is carried forward every year and deducted until all used up.

- First your passive gain will be determined based on the passive income for the year, including any gain realized on the sale.

- Passive losses then reduce the taxable gain, and can very well reduce it to zero.

- Any left over losses are then deducted from "other" ordinary income up to a maximum of $3K each year until all used up.

[AmeliesUncle]

How did you dispose of the property?  Was it sold?  Or was it disposed in some other way?  If it was sold, were there any special circumstances involved (something other than selling it to a stranger at Fair Market Value)?

In most cases, you are allowed to deduct the full amount of the unused passive losses on your current year return.  But in some circumstances, it may be different (depending on your answers to the questions above).

[Anonymous_]

Further, the $3000 per year maximum loss limitation (to offset other income) is applicable to capital losses.

[Critter-3]

As much as everyone would like to cheap out and DIY  there are times when upgrading to one of the LIVE options is the better choice especially if the rental property was no longer being reported on the Sch E ... this is one place the TT program is lacking.