Real Estate Passive Activity Loss Carry Forward $25k Limitation -- Don't Want to Use It

[KGSHU]

I have loss carry forwards and am classified as an Active Participant and MAGI below $100k so I am eligible for $25k of the loss carry forward to offset ordinary income in 2020.  I filed my taxes and TT used the $25k but it then put me in a loss for AGI.  I want to amend my return and use only a portion or even none of the $25k to manage my AGI to equal my standard deduction so my taxable income is $0.  I guess the question is do I have to use the entire $25k loss carry forward?  Can I just defer all or a portion of it to later years and then how do I amend this in TurboTax?

[M-MTax]

The $25k is NOT carried forward. You don't carry forward the part you don't use.

[maglib]

@KGSHU  See response from @Hal AL here https://ttlc.intuit.com/community/taxes/discussion/the-simple-answer-is-no-but-you-must-report-the-c...

Don't forget though about the Cares Act.  The CARES Act (2020) temporarily created a special five-year tax carryback allowance and eliminated the 80% limit on net operating losses for 2018, 2019, and 2020. The provisions of this law ended on December 31, 2020.  So you may want to amend prior year returns if that gets you a better outcome.  

[M-MTax]

??????

That link is about a capital loss carry forward. THIS is about the $25k special allowance.

If you or your spouse actively participated in a passive rental real estate activity, the amount of the passive activity loss that’s disallowed is decreased and you therefore can deduct up to $25,000 of loss from the activity from your nonpassive income.

[Critter-3]

The $25K passive loss  MUST be used in full if you qualify ... you cannot choose to not take it even if it puts you into an NOL situation.   You can choose to only carry the NOL forward  otherwise it must be carried back.  These rules are not flexible or up for discussion. 

[M-MTax]

@Critter-3 is right except I'm positive you can't create an NOL out of a passive loss from a rental until you sell it.

[Critter-3]

The program completes the form 8582 very well ... just let it do the work and don't try to override anything. 

[KGSHU]

Thanks everyone for the replies.  Let me try to be more specific.  Assume I have $100k of passive activity loss carryforwards available and I'm an Active RE participant and my MAGI is below $100k.  I know I am eligible to offset up to $25k through the Special Allowance against nonpassive income.  My issue is that I don't need to use $25k of my loss carryforwards because it puts me into a negative taxable income position.  Assume I only need to use $10k of my $100k carryforward.  I don't see a way to do that within TurboTax.  It just takes the entire $25k Special Allowance amount and then reduces my $100k loss carryforward down to $75k.  In my mind it is just a $15k waste ($25k that was used vs $10 that I need) of my loss carryforward.

Help?

[ThomasM125]

If you have a loss carryover, you must use it in the current year if you are able to. I don't know your complete tax situation so I can't comment on whether the loss is being applied properly, but I assume it is and if so, you can't apply it otherwise.

Also, if you are ending up with a net operating loss then that can be carried over to next year, so you are not losing any loss carryovers.