Should TurboTax read the prior year's passive loss carryover to the current year using the same number. That has not ever happened for me. How to I correct that correctly

[larry2275]

FYI, my 2018 return shows one number and in 2019 it reduced the number so I am losing carryover by the year.

[VolvoGirl]

Where are you looking on 2018?   Schedule D doesn't actually show the carryover amount to next year. To find your Capital Loss Carryover amount you need to look at your return schedule D page 2.  Line 16 will be your total loss and line 21 should be a max loss of 3,000.  The difference between line 16 and 21 is the carryover loss for next year.

And if you have a negative AGI or negative taxable income it will show up on 1040  BUT it won't reduce the carryover to the next year.

There is also a Carryover Worksheet. There is a Capital Loss Carryover Worksheet showing the carryover from the prior year and the current amounts.  Then there is also the Capital Loss Carry Forward worksheet showing the amount transferring over to next year.

In the Online version you have to save your return with all the worksheet as a pdf file to your computer to see the Capital Loss Carry Over and Carry Forward worksheets.

In the Desktop program you can go to Forms and find it in the list in the left column.

[larry2275]

Sorry. Your response is referring to Capital Loss Carryovers. You misread my inquiry as it is referring to Passive Loss Carryovers on Schedule E. I am looking at the Passive Loss Carryover Limitation worksheets for each year from 2011 to 2019 and they never carry the passive loss carryover using the previous year's carryover. I need to know if TT is making a mistake or is there some other reason for constantly reducing the carryover.

[VolvoGirl]

Sorry, I didn't catch that.

[Anonymous]

if you have passive losses look at form 8582 which is used to figure the PAL c/o.  look at line 16. is there an amount on that line? if so it means some of your PAL's have been allowed which reduces the c/o. 

another possibility is if you have multiple passive activities.  profits from one will be allocated against the losses from others.   

[larry2275]

I appreciate your efforts to help me out. However, Form 8582 line 16 has a zero there and it still reduces the c/o from the previous year. I do have three passive activity rentals over time, although not at the same time. I have followed the PAL c/o through all these years since 2011 and have seen TT not carry forward the previous year's PAL c/o from the previous year even when the same rental is the subject of the c/o. This does not make sense to me, as I am not an IRS auditor. Only the IRS understands how to calculate taxes. In this instance, the c/o is hundreds of thousands of dollars lower than I figure it should be using TT's system. I need to know what if you can help me.

[Anonymous]

this is a public forum and we can't see your return so don't know what is happening.  I have passive loss c/o and have never experienced an issue. the only other thing I can think of is that when you dispose of an activity the suspended losses become deductible without limitation. they actually are treated as non-passive so won't flow to form 8582. I have not seen other posts about the issue you are experiencing.  your choices are to contact TT support for which there may be a charge or consult a tax pro.    

[Carl]

Did you indicate in the program that you "actively participate" in the activity? If so, then depending on your AGI you can deduct up to $25K of your losses from "other" ordinary income, and the program will deal with that just fine. So it's perfectly possible with such a scenario that you don't have passive loss carry overs.

Do you rent to family at below FMRV? If so and you indicated so in the program, then carry over losses are just flat out not allowed. Once your deductable rental expenses get your taxable rental income to zero, that's it. You lose remaining losses permanently and forever and they can't be carried over.

[Anonymous_]

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@Carl wrote:

Do you rent to family at below FMRV? If so and you indicated so in the program, then carry over losses are just flat out not allowed. Once your deductable rental expenses get your taxable rental income to zero, that's it. You lose remaining losses permanently and forever and they can't be carried over.

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If an owner rents to a family member at below fair rental value, each day counts as a day of personal use. Typical rental expenses (e.g., utilities, maintenance, repairs, insurance) are not deductible.

The owner can, at best, deduct mortgage interest (subject to limitations), property taxes (subject to limitations), and casualty losses on Schedule A.

[larry2275]

No, I do not rent to family or below market rates. Let me be more specific. TurboTax does not carry forward 2018 Form 8582 line 1d amount of passive loss carryover (-242,593) to 2019 Form 8582 line 1c. It shows  -217,593. Why is this so?

[Anonymous_]

@larry2275 

It appears as if the differential is the $25,000 special allowance for active participation in 2018.

See https://www.irs.gov/publications/p925#en_US_2019_publink1000104571

[Anonymous]

for 2018 if your modified adjusted gross income less than $150,000 then passive real estate losses in the amount of $25,000 should have been allowed. the amount should appear in parts III and IV of the 8582.  in addition, line 26 of schedule e should show a $25,000 loss. if there is nothing in parts II, III or IV for page 2 of schedule e then line 41 would show the $25,000 loss. this loss then shows up on schedule 1 line 17.   This would be the only logical possibility. since 2019 c/o is exactly  $25,000 less than 2018's amount.  in addition, you can review the various worksheets that are part of the 8582.   if this is not what happened then see a tax pro because we have no other way to explain why the carryover dropped by exactly $25K. 

[larry2275]

So you all know, the problem I am having is caused by the glitch in the program itself. Can be resolved by TT when I am ready to file my 2020 return with a TT CPA who will fix the issue in my 2020 return. TT does not correctly (always) carry over all passive loss carryovers. As I said, a glitch in the program.