K-1: How to properly enter cumulative passive loss carryovers?

[fvargas]

I invested $60K in a company. 2020 was the 1st K-1 was generated. They have incurred losses each year – ($6727) in 2020, ($6505) in 2021, and ($2884) in 2022 (Schedule K-1, Part III, Box 1). Each year these losses are categorized as “unallowed losses” for me as I do not have passive income to apply the passive losses against. Am I reporting the carryovers correct by entering them in “Box 1 – Ordinary Income” on the “Report Carryovers – Regular Tax” screen (see photo showing 2022 numbers)?

If so, 2021 would be the 1st year I would have a carryover and the box would read ($6727). On the 2022 tax return (per the attached), the amount in that box would then be ($13,232) – the 2020 loss + 2021 loss. The 2023 amount would be ($16,116) – 3 years of losses. Is this correct?

[Mike9241]

did you use Turbotax from 2020 on?  if so the passive loss disallowed would transfer from year to year you can see this on form 8582 line 1c or 2c

under no conditions do you enter prior passive losses on the k-1 line 1 as you go forward in TurboTax 

it should ask about prior passive losses 

there's a box you must check  - you have prior year PAL c/o - to enter this info,

the next screen should ask for amounts enter as a negative number like -99999

[fvargas]

Thank you, @Mike9241 for your reply. 

Yes, I have used TurboTax for around 10 years. The issue is that I was incorrectly informed NOT to check the box "I have passive activity losses carried over from last year" under the"Describe the Partnership" section and I am now having to go back and amend 2021 and 2022. So, this means that the passive activity losses are NOT automatically carried over like they would have been had I properly checked this box in 2021 (first year to have a carryover passsive loss) and 2022. I am filing amendments to both years, checking this box, and when I do that, the previously attached screenshot pops up. 

I am just asking if this is how I properly answer the prompt/wizard when it pops up - do I put the cumulative passive loss carryovers in Box 1 per the screenshot previously attached? I believe I did it correctly as when I do that, this is how form 8582 now reads for 2021:

Thoughts? 

[PatriciaV · Accepted solution]

Yes, your entry appears to be correct for 2021 cumulative losses.

@fvargas 

[fvargas]

Thank you so much @PatriciaV for taking the time to respond. It's a weight off my shoulders to have some reassurance!