I have a schedule K-1 LLC. What do I put for carryovers for "Box 2a"? Do I put my passive activity losses from last year or leave blank as this is not "ordinary income"?

Forum|Forum|6 years ago
June 3, 2019
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The LLC is organized as a partnership. The schedule K1 I have is for real estate, and thus does not have a 'Box 2a.' In the screen(s) for regular tax (and AMT) carryovers for my passive loss ("Report Carryovers - Regular Tax"), TurboTax lists "Box 2a - ordinary income" NOT "Box 2 - Net real estate income". Should I put in my passive loss from last year in Box 2a or leave this blank as the passive loss is not ordinary income? To be clear, the only box (in Part III) with any value on my K1 from last year is Box 2, which lists my passive activity loss.

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Best answer by PatriciaV

Yes, enter the amount as a negative number in the space for Box 2. Letter (a) for Box 2 is for Ordinary Income from Recoveries, but as a suspended passive loss. The loss retains its character as passive income to be applied to "ordinary" rental income in the future. There is no other place to report this passive loss carryover.

PatriciaVAnswer

Employee

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Leashy312Author

Employee

Thank you for the clarification!

sho20bhit

Employee

A small follow-up, in Box 2a of the Turbotax Report carryover screen, do I put total passive activity losses of previous years if all previous years had rental income losses?

Thanks!

PatriciaV

Employee

No, Box 2a on the Report Carryovers - Regular Tax page is used to report Ordinary Income from Recoveries. This carryover is not related to Schedule K-1 Line 2 Net Rental Real Estate Income (loss). You can confirm this on the K-1 Worksheet, Section A Row 2.

You should report passive loss carryovers from rental activities on the K-1 that reports income or loss from Line 2. This could be the only K-1 copy for this investment or you may have set up another K-1 for the Box 2 activity. And yes, carryovers are cumulative when entered for Section A of the K-1 worksheet.

@sho20bhit

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