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TJH
Level 2
October 8, 2022
Question

1031 Exchange and Suspended Passive Losses

  • October 8, 2022
  • 2 replies
  • 31 views

In this particular 1031 exchange related to rental property, a cash settlement was given at closing.  The taxpayer has suspended losses on this property.  How do I make the tax program recognize the suspended loss?

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2 replies

Just-Lisa-Now-
Just-Lisa-Now-Intuit Community Champion
Intuit Community Champion
October 8, 2022
If you mark Box H on the Sch E worksheet, that should free up passive losses.....Im honestly not sure how that works with a 1031 exchange though.
♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
TaxGuyBill
October 8, 2022

1031 Exchange and related party.  Both of those would disallow the passive losses to be released.

However, I think the actual problem is how to tell the program that the "boot" is passive, so the passive losses would offset that.  I suspect that the program can't do that, and therefore you may need to manually do that  (manually enter the deduction on Schedule E and manually reduce the passive loss carryover).

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