Stumped by Turbo Tax question on passive loss

[Amethyst]

We have always paid a CPA to do our taxes, which are fairly complex; but it's getting expensive. I'd like to learn to do our tax.

What with selling the rental house in 2014, I feel we still need professional tax help. Since I can get TurboTax Premier for free this year, I'm going to "follow along" in TT to see if I get similar results to the CPA's. So far, inputting income and deductions is a snap!

However, I ran into trouble with the rental. TT asks: "Do you have any passive activity loss from 2013, reported on Schedule E or Form 4797?"

In 2013, the CPA did not file 4797. On Sked E, our return shows a loss of only -$6956. However, the accompanying worksheets show an unallowed loss of -$53012. This is important because the total loss, including 2014's losses, should be set against capital gains from the sale.

Does anyone know how I should answer TT's question?

Thanks very much,

Amethyst

 

[Philliefan33]

Read the help section on "passive activity". Your involvement in the rental house may not be passive.


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[Amethyst]

I did read it. We definitely qualify as passive. Far fewer than 750 hours spent managing, etc.

A.

Read the help section on "passive activity". Your involvement in the rental house may not be passive.


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[kaneohe]

Do you have F8582? Is that where the worksheets are? If the rental is totally passive (if AGI exceeds some limit , it would be) the losses for current yr go on Sch E,then are carried over to F8582 worksheets where they are combined with unallowed losses from previous yrs and then the allowed amount for the current yr are determined. In the last yr when you sell that particular activity, all previously unallowed losses along w/ the current yr loss are allowed. 4797 is also filed for that final year.

 

[Amethyst]

Yes! F8582 is where the -$53319 figure appears. Plus, your explanation is exactly what the CPA said during our 2014 tax planning session last summer. But, how do I answer TT's question, which doesn't mention F8582?

Amethyst

Do you have F8582? Is that where the worksheets are? If the rental is totally passive (if AGI exceeds some limit , it would be) the losses for current yr go on Sch E,then are carried over to F8582 worksheets where they are combined with unallowed losses from previous yrs and then the allowed amount for the current yr are determined. In the last yr when you sell that particular activity, all previously unallowed losses along w/ the current yr loss are allowed. 4797 is also filed for that final year.

 

[kaneohe]

Yes! F8582 is where the -$53319 figure appears. Plus, your explanation is exactly what the CPA said during our 2014 tax planning session last summer. But, how do I answer TT's question, which doesn't mention F8582?

Amethyst

I was trying to dance around the question but got nabbed

TT asks: "Do you have any passive activity loss from 2013, reported on Schedule E or Form 4797?"

I assume that if you answer incorrectly, you can go back and start again w/o prejudice?? If so, I would say no if I read that question literally.......the passive activity loss from 2013 was reported on F8582 & wkshts. I'm concerned that the question is worded inaccurately and if you answer no, you won't get any more questions and then TT might not know about the passive activity esp. if this is the first yr you're using it. But if an incorrect answer won't mess you up forever and you can recover, you can answer either way and see if it asks you for the carryover info. Or.....if you know/feel comfortable about forcing info into the forms and not depending on the interview, then you can do that too perhaps. I've never used TT so don't know. Others might.

 

[Amethyst]

Maybe I wasn't too clear. I'm just learning on TT this year; the CPA will still do our 2014 taxes. I don't run any real risk if I "mess up" with TT, other than having wasted my time. I promise I will not "blame" any forum members for trying to help me

Edit: I see what you are getting at; it's the same concern I had. I did try answering "no," and TT seemed to let the matter drop.

Amethyst

I was trying to dance around the question but got nabbed

TT asks: "Do you have any passive activity loss from 2013, reported on Schedule E or Form 4797?"

I assume that if you answer incorrectly, you can go back and start again w/o prejudice?? If so, I would say no if I read that question literally.......the passive activity loss from 2013 was reported on F8582 & wkshts. I'm concerned that the question is worded inaccurately and if you answer no, you won't get any more questions and then TT might not know about the passive activity esp. if this is the first yr you're using it. But if an incorrect answer won't mess you up forever and you can recover, you can answer either way and see if it asks you for the carryover info. Or.....if you know/feel comfortable about forcing info into the forms and not depending on the interview, then you can do that too perhaps. I've never used TT so don't know. Others might.

 

[Gatordoc50]

Why aren't you answering yes if your CPA did indeed file schedule e?

 

[Amethyst]

Because then I can only input the smaller (allowed) loss. Whereas TT is asking for carryover losses from all previous years. It seems a Catch-22.

I'm thinking some of our ER landlords must have encountered this situation from time to time when doing their taxes.

Amethyst

Why aren't you answering yes if your CPA did indeed file schedule e?

 

[Gatordoc50]

Because then I can only input the smaller (allowed) loss. Whereas TT is asking for carryover losses from all previous years. It seems a Catch-22. I'm thinking some of our ER landlords must have encountered this situation from time to time when doing their taxes. Amethyst

I believe that the passive activity loss carry overs are also on sch e on line 22?

 

[kaneohe]

I believe that the passive activity loss carry overs are also on sch e on line 22?

Yes, I missed that. Thanks for catching.

 

[LOL!]

With TT, one can always change any answer that one gives.

I am imagining Amethyst stuck on this question and not wanting to answer incorrectly, but I would not be surprised if TT asks about Form 8582 further along in the Q&A.

 

[Amethyst]

I appreciate all the ideas and questions, as I try "this and that."

Amethyst

 

[target2019]

If you exit that very helpful interview process and go to the Forms, things may be a bit clearer. At least that's what I have found out.