Hello TurboTax Community,
Seeking your guidance on how to exclude specific passive loss activity on my state tax return.
Quick background:
My resident state is NJ. I have a rental property in TX. I also received a Kentucky K1 from a real estate syndication fund as a limited partner. I was able to enter all the investment information on TT at the federal and state level. When I looked at the Kentucky forms, I noticed that TT is summing up all the passive losses on Form 8582-K - this includes the TX rental property and the syndication investment.
Questions:
1. Shouldn't TT exclude the TX rental property on the form 8582-K since this property has nothing to do with KY? I was expecting Form 8582-K to only include the losses from the Kentucky K1.
2. If the above statement is true, how do I tell TT to exclude the TX rental property from the Form 8582-K?
Thanks!
You are correct, the Texas property income or loss should not be listed on the Kentucky Form 8582. What you need to do is remove the Texas income from your federal return and then prepare the Kentucky return and file it. Then go back and enter the Texas income on your federal return and file it along with the New Jersey return. This may necessitate you mailing in the Kentucky return, as I'm not sure if you can e-file it separately from the federal return.