Passive activity losses related to a sold rental property.

[fourpt]

I have TurboTax for Business (for my LLC) and TurboTax Premier for my personal income tax.  I have two rental properties related to the LLC.  I sold one of the properties in 2024.  Since obtaining the properties, my income has exceeded $150,000, resulting in the accumulation of passive activity losses.  Can I write off the passive activity losses associated with the sold property for 2024 regardless of my income?  If so, how can it be reflected in TurboTax?   Do I need to fill out a dummy Schedule E and Form 4797, or should the information be transferred from the K-1?  

[PatriciaV]

Yes, when you report the sale of the property held by the LLC on the business tax return, be sure to indicate that you have passive loss carryovers. These losses will be released and reported on Schedule K-1, which you will enter on your personal Form 1040 tax return. 

Depending on your tax situation for the year, you may be able to claim the pass-through passive losses on your personal return.

Additional Information:

• IRS Tax Topic 425 - Passive Activities - Losses and Credits
• IRS Pub 925 Passive Activity and At-Risk Rules