Paasive Carryover

[S&D Associates]

I have a situation where, for example, I have $100,00 passive carryover loss which accumulated from losses from a rental partnership. The partnership (buildings) was sold and there is a $40,000 capital gain reflected on the K-! which used up $40,00 of the loss carryover. Is the remaining $60,000 loss or remain to still be used against passive losses in the future? If it were on a schedule E I would be able to deduct it all since the buildings were sold. How do I handle it in this situation. I'm using a program and it didn't make that adjustment.

[TAXNJ]

Have you looked at The Tax Book 7-8

[kathyc2]

Was the partnership dissolved?

[S&D Associates]

kathyc2 - I apologize for the misspelling and inconsistencies with the numbers. s/b 40,000 and 100,000. Yes and partnership is dissolved and B/L zeroed out. Capital accounts were -110,000.

TAXNJ - I don't know what that is.

[TAXNJ]

kathyc2 - I apologize for the misspelling and inconsistencies with the numbers. s/b 40,000 and 100,000. Yes and partnership is dissolved and B/L zeroed out. Capital accounts were -110,000.

TAXNJ - I don't know what that is.

Do you have The Tax Book?

if so look at tab 12 in addition to 7-8

[S&D Associates]

kathyc2 - I would like to hear your answer. Thank you.

[S&D Associates]

kathyc2- I would like to hear your answer. Thank you.

[kathyc2]

Your software should have something similar to K1 worksheet where you indicate that partnership interest was disposed. That will release the passive losses.

[S&D Associates]

kathyc2

Thank you I found the worksheet. Would you tell me what happens to the negative Capital Account Balances at dissolution? No distributions were ever taken since the partnership operated at a loss for all years.

[kathyc2]

kathyc2

No distributions were ever taken since the partnership operated at a loss for all years.

If the property was sold and balance sheet accounts closed out what happened to the cash received if not distributed to shareholders? Capital accounts may not be the same thing as basis. Sorry, but I think you are in over your head on this and asking more from a public forum than you should expect to receive.

[S&D Associates]

kathyc2

The cash was received from the capital gain from the sale and reported on the k-1, which is reported on the personal return.