- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Carry forward NOLs or unallowed PAL for rental property that I actively managed. I sold it this year. I am a US citizen living abroad and am preparing last 3 years taxes.
I have a choice to decide between above two methods as I am filing late. I sold my rental property this year (2017). My CPA is pushing me to file using PAL method for last three years returns. I am concerned that I may be losing out big time as I had major rental losses each year and no other ordinary income. I did pay about $16,000 in income tax in 2012 and 2013 - so I could carry back for those two years first.
Total depreciation taken - $53,000.
Capital Gain - $0.
Total rental losses in 2014-16 amount to $64,000.
Sale of a business use property of my wife also sold in 2017: Long term capital gain = $43,000 and Dep recap = 36,000,
Ordinary income in 2017 = $9,000
Thanks!
PS: I can document that I managed actively.
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Carry forward NOLs or unallowed PAL for rental property that I actively managed. I sold it this year. I am a US citizen living abroad and am preparing last 3 years taxes.
Can you clarify what your question is? You don't have a choice between them.
If you sold your rental property (in a fully taxable transaction), all previous Passive Loss carryovers from that property are released, and go on your tax return. You don't have a choice to keep them or not. If those losses create a NOL (your income on Line 41 of Form 1040 will be negative), that is a completely separate thing.
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/2896177-i-m-a-non-resident-and-my-only-income-is-from-real-estate-...>
So in 2014-2016, it sounds like you were eligible to take the $25,000 loss each year. That is not a choice. It sounds like that created a NOL for each year, which would be carried back (unless you made an election to waive the carryback on a timely filed tax return).
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Carry forward NOLs or unallowed PAL for rental property that I actively managed. I sold it this year. I am a US citizen living abroad and am preparing last 3 years taxes.
2) Is it too late to file for carryback to 2013 if I am still with in the 3 year deadline to file 2014 taxes by April 2018?
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Carry forward NOLs or unallowed PAL for rental property that I actively managed. I sold it this year. I am a US citizen living abroad and am preparing last 3 years taxes.
As you say, the deadline for 2014 is not until next April. That means you can still amend your 2012 and 2013 tax returns for the NOL that occurred in 2014. The 2014 NOL is first carried to 2012. It would only go to 2013 if it was not used up in 2012. Your 2015 NOL would be carried to 2013.
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Carry forward NOLs or unallowed PAL for rental property that I actively managed. I sold it this year. I am a US citizen living abroad and am preparing last 3 years taxes.
In that case, my accountant seems to question/ignore that I managed actively due to my presence abroad.
Curious, is there a major difference in the amount of taxes whether or not I file using NOL?
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Carry forward NOLs or unallowed PAL for rental property that I actively managed. I sold it this year. I am a US citizen living abroad and am preparing last 3 years taxes.
Yes, your accountant wants to lie on your tax return by saying you did not actively participate. He probably wants to do it because it is easier to carry a Passive Loss forward to 2017 than to amend your 2012 and 2013 tax returns for an NOL. However, lying on a tax return can be tax-fraud.
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Carry forward NOLs or unallowed PAL for rental property that I actively managed. I sold it this year. I am a US citizen living abroad and am preparing last 3 years taxes.
This is one of the major reasons I complete and file my own returns. There's no way I'm paying a CPA, if they will not sign a document to at least share any potential criminal responsibility with me.
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Carry forward NOLs or unallowed PAL for rental property that I actively managed. I sold it this year. I am a US citizen living abroad and am preparing last 3 years taxes.
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Carry forward NOLs or unallowed PAL for rental property that I actively managed. I sold it this year. I am a US citizen living abroad and am preparing last 3 years taxes.
<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p925#en_US_2016_publink1000104573">https://www.irs.gov/publications...>
<a rel="nofollow" target="_blank" href="https://www.irs.gov/instructions/i8582#idm140044366636368">https://www.irs.gov/instructions/i8582#id...>
<a rel="nofollow" target="_blank" href="https://apps.irs.gov/app/vita/content/12/12_05_005.jsp">https://apps.irs.gov/app/vita/content/12/12_...>
That CPA is absolutely wrong about amending 2012. As long as 2014 (the year of the NOL) is still an 'open' year to be amended, then the you can still amend 2012 to use the NOL. That is specifically stated in the Tax Code Section 6511(d)(2).
<a rel="nofollow" target="_blank" href="https://www.law.cornell.edu/uscode/text/26/6511#d_2">https://www.law.cornell.edu/uscode/text/26/6511...>
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Carry forward NOLs or unallowed PAL for rental property that I actively managed. I sold it this year. I am a US citizen living abroad and am preparing last 3 years taxes.
The rules on this lack clarity. According to the IRS Audit Techniques Guide there is not a specific hour requirement. Even if you use a management company, you will be considered active if you are involved with the operation of your rental. However, the taxpayer must be exercising independent judgment and not simply ratifying decisions made by a manager or management company. In addition, the taxpayer must have at least a 10% interest in the rental activity.
Still have questions?
Or browse the Forums