Do all of the previously unallowed passive losses get deducted on line 8 of the 1040 when a rental property is disposed of?  My understanding is that in the year of disposition, all passive losses and carryforwards are deducted.  I just want to make sure the passive losses can truly be included on line 8 to be used against all income not just against profit from the sale.

I entered the disposition from the depreciation screen,  as a bulk sale and the sale is reported on 4797 part III with depreciation lowering the basis creating a small gain.  This year, there is no form 8582 but the entire unallowed passive losses from last year's 8582 and a current loss from this year are reported as a large loss on 1040 schedule 1 line 5 and 1040 line 8 and it is reducing the ordinary income by that large loss.