Suspended passive losses from Rental Property A and current passive losses from Rental Property A and Passive K-1 Activity B are not being released with the sale of Rental Property C

[nomad6]

Hello,

I am new to using TurboTax, but I am trying to produce a return in the year of selling a rental real estate property for a gain. I have these current and suspended losses: 

- Rental Property A -  current losses and suspended losses

- Rental Property B (sold) - current losses and suspended losses

- Schedule K-1 - current net passive operating losses

It's my understanding from all my research that all of these losses should be unsuspended given that Rental Property B was sold at a gain in the same year. The properties are in separate Schedule E columns (they are not grouped). 

But nothing I do from Turbo Tax Mac seems to be able to release the full amount of the losses for Rental Property A or for Schedule K-1.

Can anyone help me figure out what is going on?

[Mike9241 · Accepted solution]

assuming there was a gain on disposal, passive losses from real estate would be allowed to the extent of the gain. if the k-1 is not a real estate activity, it remains subject to its PAL rules.

example

property A sold for a taxable gain of $100,000 

property A has current and suspended losses of $60,000

those are allowed in full leaving $40,000

property B has current and suspended losses of $75,000

$40,000 will be allowed and $35,000 will remain suspended (if your AGI is over $150,000 no additional special allowance for real estate activities with  active participation)

look at form 8582

yuo provided no numbers and we have no access to your return.