line 22 is the deductible loss for the current year, not the passive loss carryover, and is not subtracted from the capital gain or sale, it's simply entered as this year's operating loss. On the Schedule E. The Schedule E Worksheet, has a Carryovers Smart Worksheet further down than line 22 that shows passive loss carryovers. Such carryover losses are added to the current year's operating loss, not subtracted from the capital gain or loss from the sale.