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TT sometimes shows a passive loss from 2022 as "Before 2018"

Forum|Forum|1 year ago
July 5, 2024
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In 2022, an LP I invested in reported a loss of $18,000 on its K-1. My 2022 Form 8582 shows this as unallowed, and the CPA who did my taxes listed it as a carryover for 2023. For 2023, I'm using TT for the first time, and during the "I have passive activity losses carried over from last year" part of the K-1 interview for this LP, I entered the $18,000 carryover.

On pages 3 and 4 of the K-1 TT generates for my return, the $18,000 is shown in column (b), "Suspended Loss Carryover From Prior Year." This is correct: the carryover is from 2022, which is the prior year. However, on page 8 of the same form, the $18,000 is listed as a loss Before 2018. This is not correct: the loss is not from before 2018. The same mistake shows up on page 20 of the Sch K-1 Wks-Partnerships (...) -- Smart Worksheet: the $18,000 loss is listed as Before 2018.

How can I get TT to properly categorize this loss as from 2022 instead of as from before 2018?

I can post screen shots, if that would be helpful.

Thanks.

TurboTax Home & Biz Windows

Best answer by Mike9241

this seems to be a bug in Turbotax programming. From what I can tell that 2018 loss is only for QBI/199A loss carryforward purposes not passive loss carryforward purposes. I'm using a desktop version of Turbotax and in interview mode I could enter the 2022 PAL which came out correctly but there was no way to enter the QBI loss as 2022 so Turbotax plugged it into 2018. Under the tax laws the year of the passive loss doesn't really matter since they're aggregated by activity and then the activities are aggregated when determining what might be allowed (FORM 8582). However, under the tax laws QBI losses must be used on a FIFO basis. in answer to your question, yes you can go into forms mode and fix the error. From using TT for many years once corrected TT should c/f the loss using the correct year but can't guarantee it since I don't do the programming.

A

Anonymous_

Employee

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PerpetuallyConfusedAuthor

As a followup to my own post, would it be reasonable for me to go into Forms Mode and manually move the entries on the K-1 and the K-1 Worksheet to the right places (i.e., to the lines for 2022 instead of for Before 2018)? If I did this, would TT retain and propagate this information in future tax years?

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Mike9241Answer

this seems to be a bug in Turbotax programming. From what I can tell that 2018 loss is only for QBI/199A loss carryforward purposes not passive loss carryforward purposes. I'm using a desktop version of Turbotax and in interview mode I could enter the 2022 PAL which came out correctly but there was no way to enter the QBI loss as 2022 so Turbotax plugged it into 2018. Under the tax laws the year of the passive loss doesn't really matter since they're aggregated by activity and then the activities are aggregated when determining what might be allowed (FORM 8582). However, under the tax laws QBI losses must be used on a FIFO basis. in answer to your question, yes you can go into forms mode and fix the error. From using TT for many years once corrected TT should c/f the loss using the correct year but can't guarantee it since I don't do the programming.

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PerpetuallyConfusedAuthor

My CPA separated PAL carryovers from QBI loss carryovers, and the $18,000 in question is a PAL. I'm using the desktop edition of TT Home and Business. From what you wrote, it sounds like I should be able to get the correct result in interview mode. Since this is my first year with TT, I'm probably doing something wrong.

The $18,000 loss was reported in Box 1 of Part III of the K-1 I got from the LP last year. On my CPA's list of carryovers, the Disallowing Form is shown to be 8582, and the Originating Form is Sch E P2. Does this give you enough information to help me enter the $18,000 PAL in interview mode so that TT correctly attributes it to 2022?

Thanks.