Real Estate SECTION 465(d) CARRYOVER 2022 and 2023?

Forum|Forum|1 year ago
May 22, 2024
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Hi,

I have a rental. In 2022 this was in sch E, other expenses: SECTION 465(d) CARRYOVER $7858.

In TT 2023, is complaining because the "carryovers to 2023 smart worksheet" has the value $7858 on line B under QBI.

When I have TT check errors, TT shows: At Risk c/o-QBI should not have a value when no previously disallowed losses are present for the regular tax purposes.

Where should the $7858 value be in TT 2023? I am not sure how 2023 TT has $7858 in the "carryovers to 2023 smart worksheet"

Michele C1

The Section 465(d) carryover is referring to passive losses which were disallowed due to "at-risk" limitations. That is where you may have indicated all your investment was not "at-risk" for the activity. Look in your personal tax return and see if you have a Form 8582. If so, you will see any prior year unallowed losses in Part 1.

The QBI error you are referencing is actually another component of losses. QBI stands for qualified business income. When you have a loss they may be accumulated as QBI losses to offset future QBI income.

AmyC has a great discussion about how to resolve the QBI error along with screen shots. It can be found here.

IRS publication 925 contains all you want to know about passive activities!