The taxpayer died with considerable suspended passive rental losses. As I understand it, the taxpayer can make use of those losses on his/her final return, but only to the extent that those losses exceed the difference between DOD FMV and (adjusted?) basis.
But how to enter this in Lacerte? Does it require a footnote?
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No reply yet? Nuts, I have exactly the same question.
LOL 🤣
Oye! 😂
Er.. I guess I STILL have exactly the same question.
And no answer. I've searched elsewhere, hoping another software product would have a usable solution. Somebody dying with a lot of suspended losses and a large step-up can't be THAT rare, right?
Any input that gets you the desired output is fine; when it comes to K-1s, the IRS sees none of the input and only the output.
Do a schedule in Excel. Figure out what losses, if any, free up, for each pass-through. Set up new K-1 entries for those entities, assign those allowable losses to the freed-up entity, and mark them 2=delete next year.
A large step-up usually eliminates the problem. It's only an issue when, and to the extent that, the PAL is larger than the step-up.
Sorry, got the PAL and step-up reversed.
No pass-through entities involved. Just a taxpayer-owned rental condo.
Same theory. Adjust the carryover so the total allowable amount is right, and mark it 2 = dispose next year.
Many thanks!
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