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welikeit22
New Member

Prior Year Passive Loss Carry-forward Taken in the year of sale on Schule E

I have a partnership trust that was terminated in 2020. The trust provides a "Grantor Letter" rather than a K-1. The Trust has a prior year passive loss carry-forward from 2019. How do I  manually input this into schedule E and by pass Form 8582 so I am able to deduct the carry forward loss and the current year capital loss?

2 Replies
martinmarks1919
Level 8

Prior Year Passive Loss Carry-forward Taken in the year of sale on Schule E

They seem to be telling a lot of folks to put in the information from grantor letters AS IF you got a K-1.

JulieC14
Employee Tax Expert

Prior Year Passive Loss Carry-forward Taken in the year of sale on Schule E

When grantor trust status applies, either the grantor or a beneficiary is treated as the owner of the activity inside the trust for income tax purposes. In that case, the deemed owner must include the activity of the trust on his or her personal tax return along with any income or loss generated.  The prior year passive loss carryforward would be entered in the Rental Properties/Royalties (Sch E) section of TurboTax.  Since this is a grantor trust, you should have been entering your share of the rents and rental expenses into your 1040 as if you owned the rental property in the trust.  In the screen for entering rental income and expenses, near the bottom you will see a section for Less Common Situations.   Enter your carryover passive activity loss there.  If the rental was sold in 2020, you will need to edit the Rental Property Info in the Sch E to indicate the activity was terminated which will free up the passive loss carryover.

 

Here is a link that may be helpful with recording the sale 

 

 

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