Rental property losses.

[joefts]

If a MFS couple have rental properties with loss and are living together for part of the year, will that unallowed loss be carried over to the next year when they do not live together?

Does ProConnect automatically divide those profits/losses when you designate MFS, or is there some override or setting to allocate this?

[itonewbie]

Good luck trying to split hair with this.  The code is explicit that the couple must not live together at all times during the tax year.

469(i)(5)(B)Taxpayers not living apart.—This subsection shall not apply to a taxpayer who—
469(i)(5)(B)(i) is a married individual filing a separate return for any taxable year, and
469(i)(5)(B)(ii) does not live apart from his spouse at all times during such taxable year.

[itonewbie]

If the current year return is MFS, you will enter the ownership percentage and the numbers will flow correctly for each return and each will have his and her own PAL carryover.

If the current year return is MFJ and there is suspended PAL to be carried over, allocation of the PAL on the MFS returns next year should trace back to the ownership of the rental property.

[Accountant-Man]

Emphasis on "at all times."