passive losses from real estate LLC

[Jayson18]

I have passive losses from a real estate LLC's going back a number of years. It seems turbotax generated an 8582 only for the 2 years that I answered no to the question of being an active participant during the K1's interview. In all subsequent years I answered yes that I was an active participant. Turbotax then would not generate an 8582 in these years. It would use my passive losses to reduce my ordinary income (I qualified for this use of passive losses to offset ordinary income). In some years my passive losses were greater than my ordinary income. I do not see where turbotax is carrying forward my unused passive losses from these years. I believe turbotax did not keep track of my unused passive losses in these years. I think it only kept track of my passive losses for the 2 years it generated an 8582. This year I have only capital gains on my K1's. I wanted to use my passive losses from the previous years to offset this year's capital gains. I am hoping there is some way to correct the mess and use my passive losses from the previous years.

Can I manually enter the passive losses in turbotax? Did I have to provide form(s) to the IRS for each year that I had a passive loss carryovers? 

[ThomasM125]

Capital gain income is not normally passive income, so you may not be able to offset your passive losses with your capital gains. Most of the time capital gains are investment income, which is different from passive income.

If your passive losses were allowed to be applied to ordinary income, as may be the case with rental income in some circumstances, an unused loss would not qualify for a passive loss carryover. It would only be allowed as a net operating loss (NOL) carryover. As such, it would be available to offset ordinary income in the following year. TurboTax does not support the net operating loss calculation, but you can calculate it on your own and enter it in the following year tax return by using the query box on your menu bar and entering NOL, where you will see a "jump to nol" option:

 

You would need to go back and amend your returns to report the NOL carryover. You can only go back three years from the due date of a tax return to receive a refund of prior year taxes though.

[Jayson18]

In 2011 and 2012 Turbo tax generated form 8582 since I was not an active participant in the LLC's. I had accumulated passive loses in these 2 years. From 2013 - 2022 I had passive losses from the LLC's except for 2017 which I had a passive gain of $751. I was an active participant from 2013-2023. Turbotax applied the passive losses from my K1's for the current year to my ordinary income in those years.

In 2023 I have passive gains from the LLC's on my K1's.

The amount reported on form 8582 were never used. I thought turbotax would automatically use the disallowed passive losses once there were passive gains in subsequent years. 

I would like now to apply my 8582 disallowed passive losses from the prior 2 years to my passive gains and the NOL carryover to my ordinary income for 2023. 

Can I just use 2023 schedule 1 line 8 to report my total NOL carryover from the prior years or is it more complicated? 

How to I enter the disallowed 8582 passive losses on my 2013 return?

Are passive losses always applied to ordinary income before your standard deduction is applied seems unfair?