Re: Final K-1 / Basis Limitation Not Being Applied

ToddR · ‎10-02-2020

Individual owns an interest in a partnership with large passive loss carryover (about $5 million). In 2019, partnership K-1 is final. Partner does not have enough basis to use all of the "freed up" passive loss carryover. Partner has about $1 million in basis. Lacerte is allowing the ENTIRE passive loss carryover of $5 million and is flowing this to Schedule E, Page 2. That can't be right. What are we doing incorrectly? Or how to we get Lacerte to apply basis limit first?

PhoebeRoberts · ‎10-02-2020

The basis limitation should have applied in the year the loss originated. The order is basis, at-risk, passive, and you have to have had basis to have a passive loss carryforward.