I have 3 limited partnership K-1 that have unallowed passive losses for this year and carried over from last year. I have one limited partnership K-1 that has $60,000 on line 10 of the K-1 for a section 1231 gain. My question is in regards to the form 8582 for Passive Activity Loss Limitations that turbo tax automatically fills out. In section V of the 8582 Turbo Tax places that $60,000 section 1231 gain in Part V column "a" which is for net income. Column "b" and "c" of part V have net passive losses. When Turbotax transfers those over to part I, line 3 becomes positive so then all my unallowed passive loses become allowed losses. Is this the correct way to handle this?? It seems to me that the $60,000 is really a capital gain which Turbotax includes in Schedule D should not be included in part V of form 8582 as income. I thought that column "a' was only for passive income since the form 8582 is all about passive loss limitations. I hope Turbotax is handling this correctly as it gives me a much larger refund. But I am skeptical and afraid IRS will not allow it.
