Passive loss carryover form boxes

[wrnoof]

My wife and I have a partnership LLC owning our sailboat, which is in commercial charter fleet. Under the boat management agreement, the charter company manages all aspects of the boat and pays us a set monthly fee. This is clearly a passive hobby activity. The LLC K-1 shows a loss every year due to interest on the boat loan and depreciation. In entering the LLC K-1 into our personal return, the interview asks for passive loss carryovers. See attached. Just what are the "Box 1 - Ordinary Income", "Box 2a - Ordinary Income" and other information requested by this screen? Where do I find them? There is a similar screen for AMT passive carryover.  The built in help doesn't offer any useful guidance.

[MarilynG1 · Accepted solution]

If you used TurboTax last year, the carryover should be entered for you, but check your Schedule E Wks - Carryforward from last year for an amount. 

If you didn't use TurboTax last year, check last year's Form 8582, Page 2 for an amount.

Click this link for info on How to Enter Passive Loss Carryover.

[wrnoof]

😁Thanks. The link to another thread was especially helpful. I did not use TT last year and found a value in Form 8582, Page 3, Worksheet 6, column b. We had passive losses from more than one activity and the total for all of them was found there. Again, thanks for clarifying.

[wrnoof]

After resolving the matter regarding our boat, I moved on to another K-1 for a PTP (publicly traded partnership). When addressing passive loss carryover for our boat, entering or not entering a value in the Box 2a - Ordinary Income field did not affect my tax liability/refund. However, for this PTP K-1 it matters whether I enter a value in the Box 2a field and our tax liability/refund changes significantly. Although I found a value on Form 8582, it was never made clear whether the interview fields for "Box 1 - Ordinary Income" and "Box 2a - Ordinary Income" actually referred to Form 8582 or, if so, to which part of that form. Can anyone tell me exactly to what the fields in the interview "Report Carryovers" page refer? An image of this page is attached to my OP. Form 8582 has no Box 1 or Box 2a and I am more than a bit confused.

Bob

[ThomasM125]

If you have a loss for the current year for the boat, and all of your investment is not at risk in that venture, then the loss entered would not be deductible in the current year. So, entering it in the schedule K-1 area would not affect your income tax liability for the current year.

Your loss carryover from the previous year on form 8582 would be your current year loss (2018 in this case), (Part one, line 4) minus the amount deductible in the current year (Part IV, line 16.)

[dnd002]

I have the same question regarding what box in TurboTax the passive loss carryover gets entered into.  None of the labels in TurboTax match the labels from last year's 8582 form.  Does anyone know what box it gets entered into?  My passive carryover losses are related to a rental property.  Any help clarifying is much appreciated!

[KrisD15]

You need to list the rental property and take the passive loss on that. 

[dnd002]

Thanks for the reply.  I should clarify, I am working through the K-1 section of TurboTax.  Once I enter the K-1 information, I get to the screen below.  When I select the passive activity losses option, I arrive at the screen shown at the top of this post.  When I look back at last years filing, I find the carry over losses, but it is unclear what box (from the screen at the top of this post, or the second one that follows it) that I enter those carryover losses into.

[ThomasM125]

The ordinary income comes from passive losses reported in line 1 of your schedule K-1 for a partnership (form 1065). I'm not sure why there is a 2(a) entry , but the two of them get added together on form 8582, page 2, worksheet 3. So, it would seem safe to enter the losses in the first box (Ordinary Income.)

I think the other boxes are pretty obvious, they refer to carryovers related to the items listed.

[wrnoof]

I may have some help on why the "Box 1 - Ordinary Income" and "Box 2a - Ordinary Income" fields shown in the OP appear in the interview regarding K-1 passive loss carryovers. If, while on this screen, one switches to the forms view ("View > Forms"), the "Passive Activity Adjustment to Income or Loss" worksheet appears. On that worksheet are Box 1 and Box 2a that appear to correlate to the interview fields. Examining the worksheet form provided me some clarity on what was requested.

Best,

Bob

[migdalskiy]

Yes, looking at worksheets Box 1 is ordinary income(loss) for Schedule E, and Box 1a is ordinary income(loss) for Form 1040 "Ordinary income from recoveries". There's also 2b "Cancellation of debt income". I'm guessing the only way to enter 2b and other fields is through the worksheet directly.

There are also separate QBI carryover fields in the worksheets. I haven't found any way to enter those through the interview. Yet they seem important because they affect federal form 8995 - QBI carryovers for the next year.

There are also At-Risk limits that interview didn't ask me (perhaps I don't earn enough for that to matter?) and Passive Limits are entered through interview but they go to "Before 2018" prior year carryovers and the only way to split 2018 and Before 2018 carryovers is to enter them directly into the worksheets.

Does anyone have any clarity on how to enter 2017 and 2018 QBI carryovers through interview process?

[VictoriaD75]

QBI was not available in tax year 2017. It was created under the Tax Cuts and Jobs Act beginning in tax year 2018.

To enter QBI carryovers on your return, follow these steps:

• From the Federal menu, choose Income & Expenses
• Expand the menu for Other Business Situations
• Click Start/Revisit next to Net Operating Loss/QBI Carryforward Loss
• Continue past the NOL screen and enter your QBI information on the screen that follows

If you used TurboTax in a prior year, this information should automatically carry to your current year return.

[aa50]

Hi, 

I have the exact same question.  What are the exact boxes from form 8582, worksheet 6 that are connected with "Box 1 - Ordinary income" and "Box 2a - Ordinary income" on turbo tax.  For last year's tax return I have numbers on worksheet 6 columns a, b, and c.  I'm still not clear what are the exact numbers that go into "Box 1 - Ordinary income" and "Box 2a - Ordinary income" on turbo tax.  I did not file my taxes on Turbo tax last year, so I don't trust the numbers that are being auto populated for me.  

Thanks for the help

[ReneeM7122]

The amount from the total on Worksheet 6 carries over to the ordinary income Box 1 and 2a on form 8582.

Here is a link to instructions for Form 8582, Passive Activity Loss Limitations.

Worksheet 6

Use Worksheet 6 for any activity listed in Worksheet 5 if all the loss from that activity is reported on one form or schedule and no transactions need to be identified separately (as discussed in Worksheet 7, later). Also see Identification of Disallowed Passive Activity Deductions in Pub. 925 for more information.

Example.

You will report all the allowed loss from an activity listed in Worksheet 5 on Schedule E. Use Worksheet 6 to determine the allowed loss, even if part of the loss is a current year Schedule E loss and part of it is a prior year unallowed Schedule E loss.

On Worksheet 6, enter the name of each activity and the form or schedule and line number on which the loss is reported. See the Example for Worksheet 4. Identify each CRD from Worksheet 5 on a separate line and add "CRD" after the name of the activity.

Column (a).

For each activity entered in Worksheet 6, enter the net loss plus the prior year unallowed loss for the activity. Figure this amount by adding the losses in columns (b) and (c) of Worksheets 1 and 3 or enter the loss from column (c) of Worksheet 2.

Column (b).

For each activity entered in Worksheet 6, enter the amount from column (c) of Worksheet 5 for the activity. These are your unallowed losses for 2020. Keep a record of these amounts so the losses can be used to figure your PAL next year.

Column (c).

Subtract column (b) from column (a). These amounts are the losses allowed for 2020 under the passive loss rules. Report the amounts in this column on the forms and schedules normally used, subject to any further limitations described in Coordination With Other Limitations, earlier.

@aa50

[aa50]

Hi, 

Thanks for the info.  I'm still not certain how the turbo tax interface populates Box 1 ordinary income and Box 2a ordinary income.  Please see the attached screen grab.  From my 2019 return i have numbers in worksheet 6 (in the screen grab they are flagged 1, 2, 3).  How do the numbers in the screen grab connect to the Turbotax interface?  For example, is number "1" connected to Box 1 Ordinary income?

Do I have this wrong?  Are Box 1 and Box 2a not populated based on the previous years tax return?