TaxslayerPro users - please respond

[oceanlovin'ea]

I am trying to imput 3 K-1s I have from PTPs. The program won't let me enter all the information. They all have losses. I get an error message that says I have to have gains on line 1-4 to be equal to or greater than the losses on lines 8-12. If the PTP has losses, there are no gains to report. I have talked to 2 people and they say they are doing as the instructions say to do it based on IRS instructions. If I don't mark them as PTPs, it will let me put whatever in I want to. So it is not producing the 8582 for the unallowed losses.
My problem has started this year because I never noticed that they were PTPs and they have taken the losses every year. I refigured last year and they would have owed $5 more if the losses had not been allowed. So I wasn't too concerned about correcting previous returns but want to do it right now.

Have any of you had K-1s from PTPs with losses? If so, how did you handle the imput of the information?

Thank you so much for your help. By the way, I downloaded a sample version of Drake and I could put the information in the program and it produced the 8582.

Linda, EA

[FEDUKE404]

Clarify, please

SURELY your professional tax software has a "K-1 Partnership" entry area? (Most now are exact copies of the actual K-1, with corresponding data entry points for each item/subitem such as Line 17-A.)

I am totally confused as to your reference to Form 8582. Unless you have other (non-PTP) passive losses, and therefore bump up against the passive loss rules absent any PTP issues, there should be no Form 8582 merely for any PTP losses.

Converse of same logic: Let's assume you have no "other" Sch E items, no (correct) prior Form 8582, and only current-year PTP negative income, there would not be a Form 8582 generated in the first place. (Reason? -- You don't have a "loss" . . .)

The worksheets for PTP losses are tied to each entity. If you have ten PTPs, you should have ten separate carryover worksheets that exist until that PTP is sold. You cannot use any of the PTP losses for any purpose, except to offset (and only to zero) income from the *SAME* PTP, until such time as there is a disposition of the PTP. (Then handled somewhat akin to what you would encounter for the sale of a rental property that had earlier Form 8582 issues rattling around.)

The rules for PTP reporting on a tax return are quite complicated. My suggestion is first to "think" through what you, in theory only, can and cannot show on the current year tax return. Then you need to read very carefully the IRS instructions for how to enter any PTP income/losses on Schedule E, Part II, especially as to the required additional notations and entry rules for the "left side" and the "right side" of Lines 29. Once you have figured all of that out, then it is time to browbeat/understand the finer points of your tax software.

Apologies if I may come across a bit "teachy" but, having learned from the school of hard knocks on this subject, this approach is what you will need to pursue.

Sadly, bottom line, if you have somehow been claiming ANY prior year PTP losses (with or without a Form 8582), you do have a problem. . .

Possible saving grace: The PTP rules more or less revert to "normal" upon a true disposition of the underlying PTP.

Yes, these are the things your investment adviser likely did *NOT* tell you about. . .

Good luck!

FE

[Gary2]

The IRS instructions suggest using the 8582 worksheets for tracking PTP losses. One would hope that in this case the software prints only the worksheets and not the forms, but one never knows. Even if the software does this economically, it's easy enough in a casual reference to say 8582 when meaning just the relevant 8582 worksheets.