Taxpayer has five 1065 K1 (Public trade partner =PTP) which four has loss (each is about 5k-9k) and one small gain $702 on box 1 ordinary income of K1.
I input K 1 partnership exactly as forms provided from investors. I myself just added "material "
I insert form 6198 (passive loss limitation) for each K1 to input basic cost. I am aware basic cost allows to deduct loss not limit
The section A of all K1 show passive PTP. On top of this situation, tp has capital loss $3000.
I know the loss passive PTP not allowed (restricted) because it only can off set passive income.
I was confusing because for two below reasons
>Sche E page 2 , showed all K1 PTP loss as passive loss (0), but income $702 is non passive income (all K1 I checked material)
>Unallowed loss should show on form 8582 part V, but it does not show current year loss to carry forward
I must open the form 8582 to enter prior year loss. This is new client . The current year loss (un allowed )not show to accumulate total un allowed loss carry forward, only prior year loss I entered
Any expert or experienced tax please shares idea to help me please
I appreciate it
Best Answer Click here
Each PTP stands alone. The loss from one can only offset income ffom that one.
Unallowed losses do not go on 8582 for PTPs.
What do you mean by adding "material"? Unless your client manages the PTP I don't see how they can materially participate in the activity of the PTP.
Prior year unallowed losses get entered in each K-1's screen, down toward the bottom if it works like Lacerte.
Each PTP stands alone. The loss from one can only offset income ffom that one.
Unallowed losses do not go on 8582 for PTPs.
What do you mean by adding "material"? Unless your client manages the PTP I don't see how they can materially participate in the activity of the PTP.
Prior year unallowed losses get entered in each K-1's screen, down toward the bottom if it works like Lacerte.
Dear sjr:
I appreciate you. That really helped me to gain knowledge, resolve the issue and be confident to answer my client's question.
For your question:
"What do you mean by adding "material"? Unless your client manages the PTP I don't see how they can materially participate in the activity of the PTP."
Ans: I just thought tax payer must be material to work on that risk investment and be allowed loss (like passive rental income) . I must remove the check "material" LOL. Thank you for helping me
Because I saw my client's prior return 2021 tax year (I did not prepare), Sche E page 2 (all different PTP income and loss are off set each other) and un allowed loss flowed to form 8582..I dont know how he could get there :).
Again, many thanks to spend time for me at this tax seasoning time
You're welcome.
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