Are K-1, Box 10 Net Section 1231 losses deductible from ordinary income?

[jonathan_morgan_wharton]

These losses are from a real estate investment where I am not an active participant

[MelindaS1]

Yes, just note that in future years you may have to recapture this by taking ordinary treatment on 1231 gains, rather than capital.

See also: Instructions for Form 8582 (2025) Passive Activity Loss Limitations

[jonathan_morgan_wharton]

Thanks.

I am having trouble getting the 1231 losses to reflected in Turbo Tax - shouldn't this be done automatically?

[PatriciaV]

Yes, TurboTax will report your 1231 losses per the IRS code. To trace how TurboTax is handling your 1231 losses, you may wish to print/preview the forms in your return. In TurboTax Online, you can download a PDF by going to the left column and choosing Print Center under Tax Tools.

According to the IRS Instructions for Schedule K-1 (Form 1065) Box 10, if the amount is a loss from a passive activity, the Passive Loss Limitations for Form 4797 would apply. The calculation of the allowed loss is made per the instructions for Form 8582.

See also:

• Can I print a copy of my TurboTax Online return before I file it?
• IRS Instructions for Form 4797
• IRS Instructions for Form 8582