Client is a passive investor in a RE limited partnership. 2018 k-1 shows a gain on line 11 of the K-1 with the following note:The amount of ST CG 47K reported on line 11I of Sched K-1 is a gain on the disposition of a partnership interest and is not portfolio income. Therefore, if you treat this K-1 as passive, the amount reported on Line 11I should also follow this treatment.
I entered the amount on the K-1 and added the additional detail as ST CAP GAIN non-portfolio. The program then carries this to sched D where it is offset by PY Cap losses. Line 2 of K-1 shows 56K of rental losses. Had prior year losses of 25K. Investment has always been passive.
On line 17 of Schedule 1 the program is now allowing a 47K loss to flow through. Partner has plenty of tax basis and at risk basis. Can't shake the feeling that its double dipping. On the other hand I can see the disposition freeing up suspended PALs and that's why they're getting the second 47K loss.
Does that make sense?
TIA.
