Need help with K1 PTP and Sales schedule

[nexchap]

@4catsandme The general instructions still apply:  on the screen for 'Enter Sales Information' put the Ordinary Gain on the line indicated (you may have different numbers for 'Regular' and AMT).  Entering it here will transfer it to Form 4797.  To avoid this screen creating new Cap Gain/Loss, enter the inverse of the Ord Gain on the 'Basis' line (so if Ord Gain was 100, enter -100) and 0 for Sales Price.  You'll see all 0s on the next screen if you've done this correctly.

[4catsandme]

Okay I have done that but it's offsetting the ordinary gain from the sale with passive loss carryovers on Schedule E.  I didn't think you were allowed to do this until the entire holding was sold.

[nexchap]

@4catsandme That's allowed.  The Ordinary Gain is considered passive income from the partnership, so can free losses (just like a positive number in box 1 could free losses).  You only need a complete disposition to free up everything.

[4catsandme]

Thanks! I was hoping you would say that but I just kept seeing conflicting answers when I researched it.