Passive Activity Loss Carryover - TurboTax Business Download

[2625delaware]

This is the first year I am filing taxes on my own using the TurboTax Business download version (not Home and Business).  This is the appropriate version for a multi-member LLC.  Last years taxes were prepared by a CPA. 

I have a passive loss carryover from 2020 that I would like to use to offset the gains in 2021.  It is my understanding that I will need Form 8582 to include the passive loss carryover, however, this form is not available to me.  I believe the PAL should be entered into a K-1 worksheet, but am unable to find where.  

I have correctly identified the business as a passive activity in the set up.  The LLC entity is for managing one rental property.  

Looking for assistance, thank you. 

[Mike9241]

an LLC/1065 does not report passive loss carryovers.  that's solely at the individual level (1040)

TT Business is strictly for business returns it does not do individual returns

to make our answer easier what version of TT are you using for your 1040?

[2625delaware]

Hi Mike,

We filed a Form 1065 for the LLC last year by a CPA.  K-1's are produced with the 1065 and then we each include a K-1 information in our individual 1040's.  The LLC has two members, and each K-1 reports 50% of the profit or loss.  

So because you said Form 1065 does not report passive carryover losses, maybe we can't carry them over? 

[ZoltanB45]

You had a loss last year on the 1065. A 1065 is a pass thru entity, which means the loss goes to your 1040. If there is not any passive income for the loss to negate, it gets carried over to the following year.  

You can find out if there are any carryover losses by looking at last years individual tax return. I'm not sure if you used Turbo Tax for your personal last year, but if you did, it would flow to this year's return.

[kanc]

Hi @2625delaware  - Did you find out an answer to your question of how to transfer passive losses to TT business. I am having the same issue. I had rental properties that I used to manage and later moved them to a LLC and am filing Business taxes. I am not able to enter the passive losses carried over from prior years from my personal taxes onto my business taxes and am worried that if I delete the properties from my personal taxes the passive loses will be lost for me to recoup. Please let me know if you found a solution to this.

[PatriciaV]

Passive Losses (Form 8582) are claimed by the individual taxpayer as part of a personal tax return. Whatever income is reported to you on Schedule K-1 from the LLC can be offset by the passive losses you have remaining on your personal return. 

You are correct that when you delete the rental properties from your TurboTax return, the passive loss information will no longer carry over. Instead, you'll enter this information separately under your investment. Be sure you retain good records for the passive loss carryovers on your personal tax return each year.

The easiest way to find the appropriate section of TurboTax is to go to Tax Tools >> Tools >> Topic Search. Type in "passive loss carryover", then click the topic in the list that applies and go directly to the start of that section.

Choose the type of K-1 you need to work on, then click "Edit" beside the actual K-1 you need to review. (Add a K-1 if you have not already entered this investment.)

On the page "Describe the Partnership," look for a question like "I have passive activity losses carried over from last year." Check the box and TurboTax will ask you to "Report Carryovers" later in the interview. 

@kanc