Suspended passive loss

Discussion in 'Tax' started by Fred Chen, Jul 9, 2004.

  1. Fred Chen

    Fred Chen Guest

    I am just being lazy to ask this question on the board.

    When you sell a rental property, where do you claim
    previously suspended passive loss? Form 4797? or on the
    passive loss form? and where does this info flow to?
    Logical place will be on Sch D but I can't find how does the
    software handle this or a line item on the forms. (I use
    Lacerte if that makes a difference)

    I finally met Helen in Atlantic City in person and I must
    say it was a pleasure to listen to her presentation.

    Fred Chen, CPA in Maryland

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    Fred Chen, Jul 9, 2004
    #1
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  2. Fred Chen wrote:

    > When you sell a rental property, where do you claim
    > previously suspended passive loss?


    It is simply "released" and retains the same nature it had
    when it was first suspended. So if the suspended loss was
    an ordinary loss on rental operations, it goes to Schedule
    E.

    Section 469 does not change the nature of losses--rather, it
    merely impacts the *timing* of when a loss is ultimately
    deducted.

    --
    Ed Zollars, CPA
    Phoenix, Arizona

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    Ed Zollars, CPA, Jul 13, 2004
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  3. Fred Chen

    MAT1040X Guest

    > When you sell a rental property, where do you claim
    > previously suspended passive loss? Form 4797? or on the
    > passive loss form? and where does this info flow to?
    > Logical place will be on Sch D but I can't find how does the
    > software handle this or a line item on the forms. (I use
    > Lacerte if that makes a difference)


    When a suspended passive loss is allowed it is an ordinary
    loss, not capital - so does not go on schedule D. I believe
    the loss is first carried to Form 8582, Part 1, line 1C and
    from there to the appropriate form.

    Mary Ann Thomas, EA in AZ

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    MAT1040X, Jul 14, 2004
    #3
  4. "Fred Chen" <> wrote:

    > I am just being lazy to ask this question on the board.
    >
    > When you sell a rental property, where do you claim
    > previously suspended passive loss? Form 4797? or on the
    > passive loss form? and where does this info flow to?


    Passive loss form and flows to Schedule E.

    > Logical place will be on Sch D but I can't find how does the
    > software handle this or a line item on the forms. (I use
    > Lacerte if that makes a difference)


    Why would Schedule D be logical for an ordinary loss?

    --
    David M. Woods, EA, ChFC, CLU
    Woods Financial Services
    Norwood, MA 02062
    www.woods-financial.com

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    David Woods, EA, ChFC, CLU, Jul 14, 2004
    #4
  5. David Woods, EA, ChFC, CLU wrote:
    > "Fred Chen" <> wrote:


    >> I am just being lazy to ask this question on the board.
    >>
    >> When you sell a rental property, where do you claim
    >> previously suspended passive loss? Form 4797? or on the
    >> passive loss form? and where does this info flow to?


    ....

    > Why would Schedule D be logical for an ordinary loss?


    Because the allowance is triggered by the sale, which is
    reported on form 4797, and transferred to Schedule D?

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    Arthur L. Rubin, Jul 21, 2004
    #5
  6. "Arthur L. Rubin" <> wrote:
    > David Woods, EA, ChFC, CLU wrote:
    >> "Fred Chen" <> wrote:


    >>> I am just being lazy to ask this question on the board.
    >>>
    >>> When you sell a rental property, where do you claim
    >>> previously suspended passive loss? Form 4797? or on the
    >>> passive loss form? and where does this info flow to?


    > ...


    >> Why would Schedule D be logical for an ordinary loss?


    > Because the allowance is triggered by the sale, which is
    > reported on form 4797, and transferred to Schedule D?


    But as you yourself said, it goes to Form 4797. From there,
    you DON'T KNOW if it's going to Schedule D. You need to
    complete that form and see if it's a net ordinary loss or a
    net capital gain. If this is the only transaction appearing
    on Form 4797, again, why would it be logical for an ordinary
    loss to appear on Schedule D?

    --
    David M. Woods, EA, ChFC, CLU
    Woods Financial Services
    Norwood, MA 02062
    www.woods-financial.com

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    David Woods, EA, ChFC, CLU, Jul 23, 2004
    #6
  7. David Woods, EA, ChFC, CLU wrote:
    > "Arthur L. Rubin" <> wrote:
    >> David Woods, EA, ChFC, CLU wrote:
    >>> "Fred Chen" <> wrote:


    >>>> I am just being lazy to ask this question on the board.
    >>>>
    >>>> When you sell a rental property, where do you claim
    >>>> previously suspended passive loss? Form 4797? or on the
    >>>> passive loss form? and where does this info flow to?


    >> ...


    >>> Why would Schedule D be logical for an ordinary loss?


    >> Because the allowance is triggered by the sale, which is
    >> reported on form 4797, and transferred to Schedule D?


    > But as you yourself said, it goes to Form 4797.


    I didn't say it was accurate, just that it had some logic to
    it. (And it could still be capital loss, rather than an
    ordinary loss, in part. The suspended losses, themselves,
    are ordinary, but there could still be a capital loss from
    the 4797 transfered to Schedule D.)

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    Arthur L. Rubin, Jul 26, 2004
    #7
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