Prior years' unallowed losses, form 8582

[DAZ]

Hello, I have unallowed prior years' passive losses that I want to realize in 2019.  They have been carried forward on Form 8582.  How do I bring them in to my return now?  I overrode the balance on Schedule E page 2 but there must be a more correct way to do it.  I also need to remove them from the Form 8582.

Thanks,

[Just-Lisa-Now-]

So you disposed of the rental or got a final K-1? 

You need to mark Box H (complete disposal) on the Sch E worksheet for a rental or mark the Final box on the K-1 worksheet.

[DAZ]

Hi - I have an investment in a partnership (hedge fund) and for the past few years they've reported an operating loss from one of their portfolio investments.  I've carried that loss forward until 2019 when the fund sold that investment entirely.

I don't think I can check the Final Box because it's not a final K-1, we are just out of that investment so now I want to take the accumulated losses, because I was hit with the capital gain from the fund zeroing out it's basis in that company (it had a negative basis in the investment from the annual investment losses).

My investment in the fund is still a going concern.

Thanks again.

[sjrcpa]

Hedge fund income/loss is generally not passive but portfolio or nonpassive trade or business..

[DAZ]

Agree.  However this fund also hold operating companies, similar to a PE fund.  And because I am not managing the investments (those companies) or the fund, the operating loss that is reported to me on Line 1 is passive.  I agree that all of the other items on the K-1 (e.g., cap gains, interest, dividends, fund expenses) are not passive.

This fund eventually disposed of the operating company in 2019 and I want to now capture the current and prior year's operating losses.  I could wait until I fully redeem from the fund and get a final K-1 but I think that since the asset is gone from the portfolio, I should be able to recognize the losses, even though I still hold the investment.