Prior unallowed passive losses on rent house

[MarvinE]

For last 20 years, TP has unallowed passive losses on a rent house that has now grown to $30,000 of unallowed losses..   TP sells the rent house in 2022 and the only reason he has a profit is that he has fully depreciated the property while it was owned.  How can we take advantage of the prior unallowed passive losses on this rent house in the current year of sale of the house?

[BobKamman]

That's the way it works.  The accumulated losses are claimed in the year of complete disposition.  As my IRS instructor would say back in Taxpayer Service training days, "Follow the form.  The form is your friend."

[rbynaker]

A Lacertian may need to come along and point you at the input.  You're probably looking for a checkbox that says something like "complete disposition".  That should free up the PALs in the year of sale.

[abctax55]

Upper section of S 18  "General Info" at the very bottom:

2=delete next year.

Altho I think if you process the sale thru D 22 "General Disposition Sale date" it triggers the suspended losses too. 

[BobKamman]

@rbynaker I have to stop thinking of Lacerte as the software for really smart people who know the most about taxes.  Figured out it's for people who need to be held by the hand and guided through the forms with baby steps.  Let's start a boot camp where tax preparers have to learn how to prepare tax forms, by preparing tax forms!

[rbynaker]

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@BobKamman wrote:

@rbynaker I have to stop thinking of Lacerte as the software for really smart people who know the most about taxes.  Figured out it's for people who need to be held by the hand and guided through the forms with baby steps.  Let's start a boot camp where tax preparers have to learn how to prepare tax forms, by preparing tax forms!

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That hasn't been my experience.  Most of the Lacerte users I know are pretty smart folks.  Despite being owned by a company called "Intuit", I've heard the data entry in Lacerte is anything but intuitive.  I certainly wouldn't have thought "delete for next year" also means "taxable disposition freeing up suspended losses."  Sure, those may generally coincide but certainly not always.  And don't get me started on the whole -1 = 0 nonsense.  Perhaps we can at least agree that the average Lacerte user asking questions can at least form complete sentences with proper capitalization and punctuation, unlike many of their ProSeries counterparts. 🙂

At some point we've transitioned to a generation of tax preparers who have never completed a tax return by hand so they've never really needed to know what line on what form numbers should appear.  I'm not sure it's evolution but I'm not sure it isn't.  Considering the IRS likes to renumber the lines and move things around each year now, I certainly feel like my brain space is wasted trying to remember where Line 21 is hiding.