TT Business - How to enter Form 8582 passive activity loss from prior years

[kanc]

I created a LLC to manage my rental properties and have passive activity losses from prior year years on Form 8582 on my personal taxes. How do I transfer them to Turbo Tax Business when the rental properties are moved to the LLC. Or do I have to retain the passive losses in my personal tax filings and not transfer them to the TT Business . I do not see an equivalent of Form 8582 in TT Business 

[Critter-3]

Stop ... did you incorporate the LLC with the feds (since an LLC is a state designation ) ?   Did you get the EIN as a corporation and was told to file an 1120 by the IRS ?  

If you did not incorporate with the feds ....   Is this a single member LLC or  a multi member LLC ?  Has the rental been reported on your personal return on a Sch E in the past ?  

And was this corp just to MANAGE the rentals  or  did you actually  transfer ownership to the corp ?  

[kanc]

Hi @Critter-3  - Yes I did incorporate the LLC and have an EIN. It is a multi-member LLC with my wife and me. The rentals were reported on a Sch E in the past years and also have form 8582 passive loss that carried forward.  I also transferred the loans to a Business loan and moved the titles of the properties to the Business. While entering Business taxes for this LLC I am not seeing the option to transfer the passive loss anywhere and am concerned that I might lose this as the property will now fall off from my personal taxes as the income and expenses are reported on the K1 and it is not recorded on my TT Business tax for the LLC. I am using TT Business for the LLC and TT Premier for personal taxes.  I would really appreciate a response if anyone has addressed this situation.

[kanc]

@DianeW777  and @MarilynG1  and others who have responded to similar posts. Can anyone help answer the question I have above. I am trying to make sure I do not lose the passive losses I could not take on two properties in prior years that I used to manage in my personal taxes as rental properties that I moved to an LLC and am trying to fill out the business taxes and generate K1 instead. I do not find anyplace to enter the passive loss caryover amounts and if I delete the properties in my personal accounts as I have K1's now, I fear that I will not be able to have TT remember the passive loss. Also I have a passive income for one of the properties in my business taxes and this is showing as a gain as i have no way of entering the carryover losses from prior years   

[AbrahamT]

The first issue to resolve is what happens to the PAL Carryover when you transfer the rental property to an LLC that is not a disregarded entity.

The answer is that it remains with the individual on their personal tax return.  See this link to The Tax Advisor. See the section Carrying over suspended passive activity losses in exchange and Example 3 that follows.

You will then delete all the personal rental real estate that currently exists on your personal tax return from Sch E.

Following this, you will enter your rental income activity through the LLC'S k-1 in the K-1 input entry.

As you go though the screens, you will reach Describe the Partnership    Check off as illustrated. Following this screen, you will go to the next screen and enter your carryover figure.

 

 And you subsequently find the carryover figure on your Form 8582.

[kanc]

@AbrahamT  Thank you for the detailed explanation. I actually just submitted my old returns yesterday but did something

similar to what you have mentioned above. I had 2 rental properties that had passive carryover income from prior years ( married filed jointly)  and hence on the new return for my personal taxes I had 2 K1’s (one for me and one for my wife from the LLC). I added the amounts from both the properties from my old personal taxes and dived this by 2 and entered this amount for each of the K1 lines in my personal taxes. Hope this was the correct way to split it. The one thing I might have done wrong is that I put this amount in the income from box 2a as this was rental passive income instead of the box 1 like you had shown above. Was I supposed to enter this in Box 1 ? What is the differences between these two boxes  and will this cause an issue for future returns.? 

[AbrahamT]

From, your original question, it sounded like you had a passive loss carryover. It goes in that Box 1 as I showed you as negative number. The screenshot that you most likely are referring to is this

And this input information would be used if you were reporting any income or loss from the K-1 from your newly formed

LLC. I would suggest that you examine the Forms K-1, and 8582 to see if your desired results carried through.

[kanc]

Hi @AbrahamT  Thanks for your quick response. No I am not referring to the Box 2 where I have correctly entered the current year rental loss.  I actually was referring to your picture where it shows Box 1 ordinary Income and Box 2a - Ordinary income (Report Carryover - Regular Tax picture) and I had entered the amounts in box 2a instead of Box 1 as I had passive rental loss from 2 properties that I was carrying forward from the prior year. I just added the 2 losses and divided it by 2 (for my wife and for me - so lets say 17000 for the first property plus 3000 for the second home resulting in 20,000 total divided by 2 resulting is 10,000 like you showed for each K1) Just that I entered it in Box 2a - Ordinary income on the Report Carryovers - Regular Tax page.

Based on your response I checked the form 8582  and although I entered it in Box 2a the results were in line with what I wanted and in line with your picture shown for form 8582. I guess it does not matter whether you enter this in Box 1 - Ordinary Income or Box 2a Ordinary income as it flows correctly into Form 8582 Part 1 1c). Is my understanding correct? Still if possible I would like to understand what the difference is between these 2 income boxes - Box 1 - ordinary Income and Box 2a - Ordinary Income.

[AbrahamT]

You actually did it correctly. The loss retains it's character to be applied to ordinary rental income in the future. See HEREhttps://ttlc.intuit.com/community/business-taxes/discussion/i-have-a-schedule-k-1-llc-what-do-i-put-...