Received K-1 with no income or "Active Loss" - Is there any benefit or need to include these when I file?

Forum|Forum|1 year ago
December 13, 2024
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I invested in several real estate partnerships (starting in 2022) and have received multiple K-1's. However, none of these K-1s have reported any income, nor will I take an "active loss" from any of them. Additionally, in practice, I have received no distributions from them of any kind.

1) Do I need to include these K-1s when I file?

2) If 1 is no, then is there any reason to include them?

(E.g., Need to report capital account information / business losses so that if a taxable event occurs then TurboTax will have the information to carryover the proper deductions.)

Essentially, can I ignore these from a tax perspective until I receive any income/gain from them? I imagine the K-1 from that period would automatically carry forward losses / capital accounts to offset the income reported in that year.

Thank you!

Best answer by AmeliesUncle

If you have a loss from real estate, you still need to enter it even if you are not currently allowed the loss. It will be a Passive Loss Carryover that shows up on Form 8582.

If you don't enter it, you won't be carrying forward the Passive Loss.

AmeliesUncleAnswer

If you have a loss from real estate, you still need to enter it even if you are not currently allowed the loss. It will be a Passive Loss Carryover that shows up on Form 8582.

If you don't enter it, you won't be carrying forward the Passive Loss.

M Furius CamillusAuthor

Got it. Thanks for your response. I have a couple of follow-up questions.

1) So, to carry forward a passive loss, I need to include the K-1 in my filings over the years?

It seems per TurboTax that I have to just manually input the passive activity losses from last year. Given this, is there any benefit for including the K-1 in the first year since you will include the relevant information from carrying forward the passive loss in the next year?

2) Additionally, if the K-1 doesn't show any income or loss then is there any benefit trying to include it when I file or can I skip those?

For context, I don't expect to receive any distributions/gain/income from these until complete disposal (~10 years out). I'm trying to avoid having to needlessly complicate my taxes to carry forward passive losses if I can just do this when a taxable event occurs.

Thank you!

AmeliesUncle

1) Yes, you need to include the passive loss each year.

2) It seems extremely unlikely there will be no income or loss for a year. But in the unlikely event that happens (all numbered boxed on the K-1 or blank/zero), you don't need to enter the K-1 in the software.