Removal of carryforward losses due to step up in basis

The amount of carryforward loss greater than step up in basis is lost, and could be all or part of the carryforward loss. On the old asset sheet put date of death under sold asset, and leave rest blank. Make a new asset using the new basis. On the final joint return on the 8582 if all the amount of carryforward is lost you will have to override the amount to zero, and make note as lost due to step up basis greater than loss

Terry53029:

Regarding From 8582, the 2025 rental losses were ($24,676) and the PY unallowed losses were ($32,483) resulting in a combined loss of ($57,159) (Part I, line 3).  Since Part II, line 6 (MAGI) is greater than the $150,000 threshold, Part II, line 9 is $0, therefore, no losses are allowed for 2025 (if there was some to be allowed).  All PY losses are lost not only because of the step-up is greater than the losses, but also, the MAGI is greater than $150,000.  Is my understanding of this proper?  Thank you.    

Learn something every day, I wasn’t aware of Section 469(g)(2).  But how does it apply to joint tenants?  Doesn’t the surviving spouse still get to keep his half of the carryover loss?  Not that I would trust AI Slop, but this is what it tells me, suggesting further research:  “Joint Tenancy (50/50): If the couple owned the property jointly, only the deceased spouse’s 50% share triggers the rule. The deceased spouse's 50% of the PALs are reduced by their 50% share of the basis step-up. The surviving spouse simply keeps their own 50% of the PALs suspended.”

Since the state of Washington is a community property state, the step-up in basis is allowed in its entirety.

It makes a lot of difference for taxpayers residing in Washington.  I made the decision, in concurrence with the client, to file a 2024 joint return as it was more advantageous for the clients.  Even if half of the carryover loss was preserved, it would not have mattered as the step-up in basis was greater than the loss.

So much for your fruit analogy.  Whether they are apples or oranges, it still didn’t work.