How to claim unallowed passive business loss carryover from a K-1 from previous tax year in TurboTax Home & Business?

Forum|Forum|5 years ago
March 28, 2021
4 replies
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I am a member of two multi-member LLCs: LLC-A and LLC-B. I have passive business income/loss from both LLC-A and LLC-B as follows:

1. Tax year 2019:
a. LLC-A: passive business income of $13,000
b. LLC-B: passive business income of -$20,000 (loss)

As per IRS rules, the entire passive business income of $13k was nullified, leaving -$7k (loss) to be claimed in future year(s).

2. Tax year 2020:
a. LLC-A: passive business income of $3,000
b. LLC-B: passive business income of $9,000

As there is $12k of total passive business income, I should be able to deduct the -$7k (loss) leftover from the previous year for a net total business income of $5k for 2020.

I am using TurboTax Home & Business to file my tax return in 2020 but had used a different software to file my tax return in 2019.

My question is: where/how do I enter the -$7k (loss) carryover from 2019 to offset the $12k total business income in 2020?

TurboTax Free Edition Online

Anonymous_

Level 15

Are you using the Free Online version of TurboTax? If so, you will have to upgrade to enter the carryover.

Otherwise, you can enter your passive loss carryover in the K-1 section of the program.

eipropsAuthor

Level 2

Thanks to your reply, I got part of the answer (BTW, I'm using TT Home & Business 2020, not the free online version). Here's how far I got:

1) Select "PERSONAL" tab

2) Select the "Personal Income" section

3) Scroll down to "Business Investment and Estate/Trust Income" - click on the "Update" button for Schedule K-1

4) Click on the "Update" button for "Partnerships/LLCs (Form 1065)"

5) Click on the "Update" button next to the LLC with the unallowed passive loss carryover from the previous year

6) Click through multiple "Continue" (or other relevant) buttons on the next few screens until the "Describe the Partnership" screen - click on the "I have passive activity losses carried over from last year" checkbox

Under the heading "Report Carryovers - Regular Tax", it asks you to "Enter your passive loss carryovers for regular tax purposes as negative numbers". It offers several boxes - the top 2 of which are:

a) Box 1 - Ordinary Income

b) Box 2a - Ordinary Income

I guess I need to enter the passive loss carryover here but which one? Which form do these boxes belong to?

Thanks!