Best Answer Click here
If you enter them as passive, the passive activity limits are automatically applied by Lacerte. I get some oddball fund-of-funds K-1s that report a portion of the capital gains and losses as passive, and I treat them as such. Unless you have reason to think a particular item of capital gain or loss is passive, it's probably portfolio (non-passive), even if the K-1 comes from an activity that the taxpayer isn't active in.
I'm trying to come up with a scenario where an item would properly be both passive and capital (rather than 1231) - the sale of cropshared bare land, maybe? Do I have my doubts about the presentation of those oddball K-1s? Yep. Am I leaning hard on the K-1 preparer being a non-signing preparer of my client's return, such that the liability for that presentation lands on them not me? Heck yes.
If you enter them as passive, the passive activity limits are automatically applied by Lacerte. I get some oddball fund-of-funds K-1s that report a portion of the capital gains and losses as passive, and I treat them as such. Unless you have reason to think a particular item of capital gain or loss is passive, it's probably portfolio (non-passive), even if the K-1 comes from an activity that the taxpayer isn't active in.
I'm trying to come up with a scenario where an item would properly be both passive and capital (rather than 1231) - the sale of cropshared bare land, maybe? Do I have my doubts about the presentation of those oddball K-1s? Yep. Am I leaning hard on the K-1 preparer being a non-signing preparer of my client's return, such that the liability for that presentation lands on them not me? Heck yes.
You have clicked a link to a site outside of the Intuit Accountants Community. By clicking "Continue", you will leave the community and be taken to that site instead.