Passive activity loss from rental properties in AZ

[DaveF1006]

Yes, that is correct. The entire passive loss amount was used to reduce your taxable income to zero or below zero. Unfortunately, since the passive loss amount is a set amount, any excess portion of that loss beyond the offset of the income results in negative income for the year. Any excess passive loss is not carried over into the next tax year.  

So yes, you do have a gain this year because you do not have a passive loss to offset your income this year. 

[maglib]

i found this. note I am not an AZ tax specialist. 
The nonresident passive activity loss is calculated in an Individual Tax Return as follows: 

1. Start with the Total Federal Loss for each entity.
2. Find the Federal Disallowed Loss and Allowed Loss for each entity.
3. Divide the Federal Allowed Loss by the Total Federal Loss to produce the ratio used in this calculation. 
   • Note: Self-charged interest is not included in the equation.
4. Take the ratio found in Step 3 and multiply it by the state loss amount for that activity. 
   • This should produce the allowed state loss.
   • This needs to be completed entity by entity.
5. Finally, subtract out the state income from that entity to reduce the total income/loss. 

Example

The taxpayer has a K-1 with a total Federal loss of $76,645.

• Using the Form 8582, it was discovered that the Federal disallowed loss is $65,097.
  • This leaves the taxpayer with an allowable Federal loss of $11,548.
• The total AZ  loss is $19,886.
• There is a total of $1,000 in AZ income.

Using the steps above following conclusion can be reached: 

1. Total Federal Loss = $76,645
2. Federal Disallowed Loss = $65,097 and the Federal Allowed Loss is $11,548
3. 11548/76645 = .150669
4. .150669 * 19886 = $2,996
5. AZ loss = $2,996
6. 2996 - 1000 = $1,996

[bazbsg]

thank you everyone