1231 Carryover

[kaplina]

I sold a rental property in 2019 that I believe has non captured 1231 losses that did not automatically roll over. 

I don't see form 4797 in my prior tax years, but form 8582 shows the cumulative passive loss. How do I capture this cumulative passive loss? 

Thanks

[tagteam · Accepted solution]

Your post is somewhat confusing in the sense that you would not expect to see Form 4797 in a previous year unless you disposed of business property (which would ordinarily include rental property).

Also, non-recaptured 1231 losses are net 1231 losses for the prior five years that have not been applied against any 1231 gains. If you had any 1231 losses in the prior five years, then any 1231 gains are ordinary gains to the extent of your 1231 losses in those prior five years.

Suspended (disallowed) passive activity losses are released upon a disposition of that activity to an unrelated third party in a fully taxable transaction. If you sold a rental in 2019, then all of the previously disallowed losses are released which may result in an NOL (net operating loss) for the year of the sale.

[kaplina]

Thanks for clarifying, I sold a rental in 2019 and have suspended passive activity losses. I was assuming those would automatically carryover into my return, but did not see that. Where should that be entered on my taxes? And is form 8582 where I should look for the total suspended passive activity losses on my 2018 return? 

[tagteam]

The suspended (disallowed) passive activity real estate losses should have been transferred in when you transferred your 2018 return into the 2019 version of the program. At least that is what occurred on my 2018 test return that was transferred in to my 2019 test return from Form 8582,

You should find a Disposition Report (in Forms Mode) which should have the carryover loss from the prior year.