Form 3468 Part V not reporting on Form 3800

[eastend19]

Hello everyone 

I have a Partnership K1 Box 20 E Basis of Energy Property for Solar installation. This is a commercial rental real estate business. I input the required information on Form 3468 and completed Part V Section A. The total credit feeds to Line 11 on Form 3468 and should appear on Form 3800, Part III, line 1V. When I go to 3800 there is nothing on line 1V. I went to the 3800 Worksheet and I cannot make any edits to 1v and the value is blank. 

What am I missing? I can see in Business Credits section the completed form 3468 with credit amount, but it seems to not be making it to the Form 3800 at all. 

[DaveF1006]

Since this is a commercial rental real estate business, which is usually considered passive, the Passive Activity Loss (and Credit) Limitations are likely the main reason.

1. The "Passive Activity" Barrier

Because the credit is generated by a rental real estate partnership, it is generally classified as a passive activity credit. Even if Form 3468 calculates a credit of, say, $10,000, that amount cannot be used to offset taxes on your "active" income (like W-2 wages or self-employment income).

1. The Workflow: Form 3468 → Form 8582-CR (Passive Activity Credit Limitations) → Form 3800.
2. The Issue: If you do not have enough passive tax liability (tax generated specifically by other profitable rental properties or passive businesses), Form 8582-CR will "trap" the credit. It won't flow to Form 3800, Part III, Line 1v because it isn't currently allowable. It will instead be carried forward to future years.

2. Check the "Material Participation" Status

In your tax software, look at the K-1 entry screen for this partnership.

1. Did you mark yourself as a Passive Participant? (Most common for K-1 investors).
2. If you are a Real Estate Professional for tax purposes and you materially participate, you must ensure that box is checked. If it isn't, the software defaults to passive treatment and hides the credit.

3. At-Risk and Basis Limitations

1. Before a credit can flow to Form 3800, it must pass the At-Risk Rules (Form 6198) and Basis Limitations.
2. If your partnership basis is zero or negative, or if you are not "at-risk" for the investment (e.g., non-recourse financing that doesn't meet specific solar exceptions), the credit may be suspended at the K-1 input level.

4. Source of the Credit (Part III vs. Part IV)

Check Form 3468 again.

1. Energy Property: For solar installed in 2023/2024, ensure it is correctly categorized. Credits from "passive" sources are usually consolidated on Form 3800, Part III, but they may be categorized under different "bins" (Type A, B, or C) depending on whether they are subject to the Alternative Minimum Tax (AMT).
2. If the software thinks the credit is "Non-allowable" due to your tax liability being zero (or being hit by the tentative minimum tax), it will leave Line 1v blank and move the value to a Carryforward schedule instead.

Troubleshooting Steps:

1. View the PDF/Preview: Look for Form 8582-CR. If you see your solar credit amount sitting there on the "Unallowed Credit" line, you have confirmed it is a passive activity limitation.
2. Check Net Income: Do you have other rental properties showing a profit this year? If your total rental "bucket" is a loss, you generally cannot use the solar credit this year.
3. Software Override: Ensure you haven't accidentally checked a box in the K-1 entry that says "Check if this is a Publicly Traded Partnership (PTP)," as those have even stricter credit rules.

[eastend19]

Thank you for this detailed answer. To clarify - this commercial real estate rental is self-rented to a business that I entirely own, which I believe makes the rental business income active, not passive. But following your logic, I do not see Form 8582-CR at all. 

On the K1 material participation is selected in addition to: 

1) Special Handling of Rental Activities - Yes

2) Does this rental qualify as a trade or business? - Yes

3) Type of activity reported on K1 - Rental Real Estate

2025 was the first year the rental business had active income, previous years were construction and had passive losses which were carried forward. Could that change from 2024 to 2025 be causing the issue? 

Should I try deleting the entire K1 and Form 3468 and starting from scratch? 

[DaveF1006]

Yes, deleting the K-1 may be the answer but before you do, try these steps.

1. Check the "Self-Rental" Toggle: Go back to the K-1 entry. Look for a checkbox specifically labeled "Income is from a self-rental" or "Reg. 1.469-2(f)(6) recharacterization." Checking this is often the "key" that unlocks the flow from the K-1 to Form 3800. 
2. Verify Form 8582-CR: Even if you don't "see" it in your main forms, look at your "Forms in Use" or "Underlying Worksheets." If the credit is sitting on a worksheet for 8582-CR, the software still thinks the activity is passive.

If the toggles are correct and it's still blank:

• Delete Form 3468. 
• Delete the K-1.
• Re-enter the K-1 first. Ensure you select "Material Participant" and "Self-Rental" before you add the Box 20 energy property data. Sometimes the sequence of data entry creates " limitations" in the software's calculations.

As a suggestion, look at your Form 1040, Line 18 (Tax Liability). If that number is $0$ (before credits), the credit has nowhere to go on Form 3800 and will be stored as a carryforward for 2026.

[eastend19]

So I deleted the K1 and Form 3468. Started from scratch. 

The only questions on Turbotax Home & Business (Mac) are: 

1) Did you actively participate? - Yes

2) Do either (or both) of the above conditions apply to the rental activity for this LLC? - Yes. Apply the special handling rules to this rental activity.

3) Does this rental qualify as a trade or business? -Yes

Adding in the credit it still does not appear on Form 3800 Part III 1v. When I go to Form 8582 it shows the business there as 2025 Passive RE. So there seems to be some issue on forcing this to be active non passive. 

When I open the forms for the K1, the following boxes are selected: 

Box 2: 

Check if materially participated in rental real estate activities - checked

Check if "actively" participated in rental real estate activities - checked

Check if rental of property is a type subject to recharacterization rules - checked

Check if rental real estate activity is a trade or business - checked

It's almost as if because business activity type is Rental Real Estate that it automatically assumes passive. Section A of the K1 shows at the top Classification "Active RE". 

[eastend19]

@DaveF1006 so just realized one issue - ordinary business income is negative, so even if active the losses are still passive. That is why it is not appearing on Form 3800. 

However - Form 8582-CR does not appear unless I uncheck "Check if rental of property is a type subject to recharacterization rules". Once that check is removed the Form 8582-CR appears with all info properly recorded for carryover credit. 

I need that checkbox checked as there is self-rental, but I do not see where this credit ends up. 

[DaveF1006]

It depends. Since your ordinary business income is negative, you have no "passive income" to trigger the credit. But because the box is checked, the software is likely treating the credit as an Active Business Credit that should go straight to Form 3800. However, since you have no tax liability (due to the losses), the credit can't be used and should be carried forward.

If the checkbox is on and 8582-CR is gone, check these three locations in your tax software:

1. Form 3800, Part III: Look for the specific credit code. Even if it’s not "allowed" this year, it should be listed here. 
2. General Business Credit Carryforward Worksheet: TurboTax generates a specific worksheet showing the credit was generated but "unallowed due to 0 tax liability," moving it to a carryover schedule. 
3. Schedule K-1 (Form 1065/1120-S) Basis/At-Risk Worksheets: If this is a pass-through entity, the credit might be sitting on the "Shareholder/Partner Credit Limitation" worksheet, waiting for you to have enough tax liability to "unlock" it.

Now you may ask, why does the checkbox hide form 8582-CR? 

1. With the box UNCHECKED: TurboTax treats the rental as a standard Passive Activity. It generates Form 8582-CR to see if you have any passive income to "unlock" the credit. Since you have no passive income, the form shows the credit is suspended. 
2. With the box CHECKED: TurboTax recognizes this as Self-Rental. Since self-rental income is "Non-Passive," the software often assumes the activity is no longer subject to the Passive Activity Credit limits (8582-CR). 
3. The Problem: Because you have a loss (negative business income), there is no tax liability to offset. The software effectively moves the credit from the "Passive Credit" bucket (8582-CR) to the "General Business Credit Carryforward"  (3800/Worksheet).

To verify if the carryover is reported on your Form 3800, look 0n line 6 or line 38 to see if it is recorded on that form.

[eastend19]

The credit is nowhere to be found. Does not end up on Form 3800. 

I believe the error is how TT handles the Form 3468 Part V credit. Per IRS for all solar investments in 2025 should be using Section 48E which is Form 3468 part V Section A. Previous years were Section 48, Part VI Section B. 

I moved the credit to Part VI and the credit appears properly in Form 3800 now. Turbotax needs to update the software to reflect Section 48E usage. I can manually override for now but happy to report I believe this is the issue.