Unallowed Losses from a PTP not showing up on Form 8582

[MAC18]

I have an unallowed loss from a Publicly Traded Partnership (PTP) reported to me on a k-1.  The unallowed loss is suppose to be reported on Form 8582 to carry forward for future years.  However, after entering my k-1 data into TurboTax, the loss is not showing up on Form 8582.  How do I get the unallowed loss to show up on Form 8582 so that I can use it to offset future gains?

[Anonymous_ · Accepted solution]

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@MAC18 wrote:

How do I get the unallowed loss to show up on Form 8582 so that I can use it to offset future gains?

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In TurboTax, there is a PTP Worksheet where any unallowed loss from a PTP is calculated and carried over to the following tax year (i.e., not Form 8582).

[Mike9241]

by law, each PTP stands on its own. the loss from one can not be used to offset the income from another. therefore PTP income and losses never show up on form 8582

[MAC18]

Per the IRS's Partner's Instructions for Schedule k-1, it says "To allocate and keep a record of the unallowed losses, use Parts VII, VIII, and IX of Form 8582". This is on page 5 under the Publicly Traded Partnerships )PTPs) section.  So TurboTax should be putting these unallowed losses on Form 8582 but it is no doing so.  I do see the losses on the PTP Worksheet but according to IRS instructions they need to be reported on Form 8582.  Any idea why this is not happening?

[Anonymous_]

You missed the following line on the same page and in the same section.

Do not report passive income, gains, or losses from a PTP on Form 8582.

See https://www.irs.gov/instructions/i1065sk1#en_US_2020_publink11396nd0e919

[MAC18]

Thank you Tagteam.  I see that line but I also see where it says to record your unallowed losses on Form 8582.  Very confusing. It appears form 8582 is only required to be filed if one is actually taking a passive activity loss, rather than carrying forward an unallowed losses.  It appears TurboTax should still put the unallowed loss on form 8582 but not file it if there is no loss being taken.

[Anonymous_]

I believe TurboTax is handling the scenario correctly; Form 8582 is not used.

The program should carry the loss forward, just not on that form.

[TaxHacks]

Sorry for being late, but I just noticed.

Make sure that you have checked the checkbox for Final K-1. When you do that, you should be able to get your losses.

Try it on a copy of your TT file, and if you end up saving enough, go the procedure for amending your return.

[Mike9241]

PTP losses never flow to form 8582. Turbotax is handling this correctly. under the tax laws, each PTP stands on its own. passive losses from one can not be used to offset passive income from another PTP or even passive income from a non-PTP.  if handled correctly, on disposition the suspended losses will flow to schedule E page 2  and any ordinary income recapture (provided in a supplemental schedule) will flow to line 10 of 4797.

[TaxWDC11229]

I just found out that I didn't report the correct unallowed losses on the 2021 Form.  Do I need to file an amendment to last year's return to making the corrections?  Or can I manually update the current 2022 tax return?

Thank you.

[Cynthiad66]

Any change that will affect 2021 taxes will have to be reported on the amended 2021 return.  Will the adjustments change the actual taxes or is it just a reporting adjustment.  If the numbers on the tax return will not change or it does not affect carryforwards, then consider not amending.

The IRS may correct certain errors on a return and may accept returns without certain required forms or schedules. In these instances, there's no need to amend your return. However, file an amended return if there's a change in your filing status, income, deductions, credits, or tax liability.