Form 8582 1a input with net section 1231 gain

Forum|Forum|2 years ago
January 20, 2024
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In my K-1, I have a loss from box 2(Net rental real estate income(loss)) and a gain from box 10(Net section 1231 gain). When TurboTax generated Form 8582, it automatically put my net section 1231 gain into box 1a(Activities with net income). My understanding of section 1231 gain is that it's a capital gain of an investment which in my case is selling of a property.

Please help me to understand why TurboTax put a captial gain in Passive Activity Loss Limitations(Form 8582).

Thanks, Long

TurboTax Home & Biz Windows

PatriciaV

Employee

According to the IRS Instructions for Form 8582, Net Income (box 1a) "is the excess of current year income over current year deductions from the activity. This includes any current year gains or losses from the disposition of assets or an interest in the activity."

The passive activity loss limitations do not separate ordinary income/loss from capital gains/losses for Part I of Form 8582.

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