1031-How to Input relinquished property carryover Loss

[newwebfin]

I sold the first property with a 1031 exchange and sold another rental property with gain and this property is not in 1031 exchange, as per IRS reg. we need to carry over relinquished properties PAL loss to replacement property. But when I input 2nd property gain information it absorbed all the PAL from relinquished property loss as well.

Do you think I am doing the right approach

[Just-Lisa-Now-]

You can input the carryover loss on down down down the Sch E worksheet for the replacement property.

But passive losses will offset passive gains, so dont be surprised if the losses from one property offset the gains on another.

[newwebfin]

Hello Lisa,

Thank you for your input, sorry to bother your again,

Here is the fact, client sold the first property with a 1031 exchange and sold another rental property with gain and this property is not in 1031 exchange, as per IRS reg. we need to carry over relinquished properties PAL loss to replacement property. But when I input 2nd property gain information it absorbed all the PAL from relinquished property loss as well.

Do you think I am doing the right way, or just simple override the software.

Best

Moine

[sjrcpa]

Passive losses, from whatever source, are allowed to the extent there is passive income. Look at the 8582, or mock one up if the software didn't generate one (because there is overall passive income)

[newwebfin]

Thank you, Lisa, so proseries software doing correct I mean offsetting replacement property loss against other property Capital gain.

Again, thank you I spent whole weekend no luck, finally you help me. You are the best.