How do I know if I have at-risk losses carried over from 2018?

[LinaJ2020]

Review your prior year passive loss carryovers on Form 8582 of your prior year tax returns. Unallowed losses on Form 8582 Worksheets 5, 6 or 7 are the losses that carry forward to the next year.

See form and instructions on IRS website, click here: https://www.irs.gov/forms-pubs/about-form-8582

I am also attaching a post from llamacorn7 for reference.  Click here: Carryover

[kkurni]

Does Passive loss the same as at-risk losses carried over?

[LinaJ2020]

Not the same.  But are related.  If you have an at-risk carryover, you should have a number on line 21 of 2018 Form 6198 At-Risk Limitations.  And, if the loss is from a passive activity, you would have a Form 8582 "Passive Activity Loss Limitations"

For more information, see both Form 6198 and 8582:  https://www.irs.gov/pub/irs-pdf/f6198.pdf and https://www.irs.gov/pub/irs-pdf/f8582.pdf

Also, to see a list of the at-risk activities, click here https://www.irs.gov/pub/irs-prior/i6198--2020.pdf.  To see passive activities, click here: https://www.irs.gov/pub/irs-pdf/i8582.pdf

[47acre94]

I suspect that I may have at-risk losses that I have not carried forward from previous years... 

I have K-1 from publicly traded partnerships (PTPs). In years past, I believe I have always stated that my losses were "at-risk": at least in the printouts I have from past years there is a check box for each of these partnerships with an "X" in that box... don't think that my memory is so good that I can remember how I answered this in 2016!  As one proceeds through the TurboTax questionnaire, one comes to a page that says "Describe the Partnership" and one of the boxes is "I have At-Risk Losses from year Y", where Y is the previous year.  How do I tell how I answered that question in years past?  Could our tax code be any more complicated? Seriously...

Thanks,

47acre94

[DavidS127]

If you had disallowed at-risk losses in 2018, they would have been calculated and reported on a Form 6198 At-Risk Limitations in your 2018 tax return.

[47acre94]

Hello DavidS127,

I did not find a Form 6198 associated with my return and I don't remember ever "disallowing" any of my losses last year. Since my question yesterday, I believe I've figured out what you are talking about. Please confirm if what I'm writing/describing is true: 

When entering the information for a K-1 received from a publicly traded partnership (PTP) there comes a point where it asks to "Describe the Partnership". There are a number of boxes below that you must check if they apply. For example, I have always checked the box #2 and #3, which state "I have passive activity losses carried over from the last year" and "all of my investment in this activity is at-risk". There is another box that I have not checked in the past, but I believe I should have and is my main question:

The box says "I have at-risk losses carrying over from 2018". If this box is selected, TurboTax will launch the "K-1 At Risk Limitation Worksheet". In this worksheet, there are 4 columns of information:

1. Total current income or loss (i.e. for this year)

2. Carryover Prior year loss - this is the column they are asking you to complete

3. Allowed Income or Loss - calculated based on columns 1 and 2

4. Disallowed Income or Loss - calculated based on columns 1 and 2

Unlike most things that TurboTax will keep track of - like the passive losses - it seems they want you to manually enter these values in here even though you've already stated they are "at-risk"?

My questions based on the above are:

1. Am I understanding this correctly? Do I check that box and then manually enter the At-Risk losses from a previous year? Presumably, this would be 100% of the value that is in column #1.

2. Presumably, the answer to question #1 is "yes", then must I go back to whenever I purchased these PTPs and redo my taxes for every year up until today?

3. What forms should I get from TurboTax as a record of these additional "At risk losses"?

4. Where/how does Form 6198 come into play?

Thanks,

47acre94

[DavidS127]

If you don't have a Form 6198 from 2018, you don't have "at-risk losses" that carry from 2018.  That would be consistent with your statement that you always check the "all my investment in this activity is at risk" box in prior years.

Form 6198 reports and tracks losses from your partnership that you could not deduct in a year because the losses exceeded the amount you had "at risk" for the investment.

If you believe somehow that you had amounts that were not at risk in prior years, you would need to amend those prior year tax returns and limit your losses to the amount at risk in that year.  Form 6198 would track these "at-risk disallowed losses" and carry them forward to future years when they could be deducted.

If you are uncertain, ask the partnership.

See the section of IRS Publication 925 at this link for the rules on at-risk limits.