Suspended passive loss


F

Fred Chen

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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E

Ed Zollars, CPA

Fred said:
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.
 
M

MAT1040X

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
 
D

David Woods, EA, ChFC, CLU

Fred Chen said:
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?
 
A

Arthur L. Rubin

....

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?
 
D

David Woods, EA, ChFC, CLU

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?
 
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A

Arthur L. Rubin

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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