sold rental property and report suspend passive loss

Forum|Forum|6 years ago
April 12, 2020
6 replies
32 views

sold my rental property last year and reported as sale of business. i had little gain from the sale but over the years i have unallowed passive activity loss reported on 8582. when i reported those unallowed loss under 'Nonrecaptured Section 1231 loss', my refund reduced somhow, shoudn't it go up? I read more on 4797 instruction, seems like that section is used to report 'section 1231 losses deducted during the 5 preceding tax years', then where do i report my suspended PALs?

ColeenD3

Level 15

I'm assuming you mean that you recorded the sale under Sales of Business Property rather than in the Rental section. You will have to adjust the basis by hand by the amount of your 8582 losses. Keep your Form 8582 with your printed return.

@nangua825

nangua825Author

Level 3

thanks for the quick response, yes i reported as Sales of Business Property, can you tell me which IRS Pub has the info you were talking about? adding suspended PALs into cost basis, i'm reading Pub 544, 551, 4797 and cannot find anything about it.

ColeenD3

Level 15

Unfortunately, you have to act within the confines of the program. If you had had rental income in 2019, you would have been able to enter the sale there and the passive losses would have been incorporated. They have to be taken into account and you can't adjust the sales price. This is why I am strongly suggesting that you keep the Form 8582 very safe.

From Form 8582 instructions.

Form 4797

If you sold assets from a passive activity or you sold an interest in your passive activity, all gains from the activity must be entered on the appropriate line of Form 4797.

@nangua825