Oregon Passive Activity Loss Tracking

[Edjuki]

I live in Washington, but I have rental property in Oregon. Because my income is over the threshold, I can't deduct the passive activity loss. I prepared an Oregon return, but the amount that transfers from my federal return as Oregon source income shows zero. How does the Oregon Department of Revenue track the unallowed loss carry forward if there is no Oregon equivalent to the IRS Form 8582? I am concerned there will be no record with Oregon when I dispose of the property, and they will not allow the losses to be recovered.

[MaryK4]

Oregon tracks unallowed passive activity losses (PALs) for nonresidents through the Oregon Nonresident Income Tax Return (Form OR-40-N) by following federal passive loss rules. Although Oregon does not have a separate state-specific Form 8582, you must track these losses by filing a non-resident return annually, which records the suspended loss in the Oregon column. 

On your Form OR-40-N, the "Oregon Source Income" column should show the suspended loss. You are essentially using the tax return itself to track the loss.  

In TurboTax, you must make an adjustment in the state depreciation to record the proper loss.  During the Oregon state interview, TurboTax should prompt you for "Oregon-specific" adjustments.