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- Does Colorado not allow full rental loss carryforwards for non-residents?
Does Colorado not allow full rental loss carryforwards for non-residents?
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jberrier
Level 1
06-27-2022
03:34 PM
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My client is a full-year TX resident with a rental home in CO. The rental property is the only CO-sourced income/expenses and the taxpayers are filing as full-year, non-residents for CO. The rental loss for federal (Schedule E) is approximately -$42,000, which is being allowed in full (for Federal) due to income from disposing of another rental in TX.
On CO DR-104PN, line 17 the Colorado-source income (loss) is shown as -$25,000. The total federal Schedule E loss reported on line 16 of DR-104PN is -$61,120.
The general info tab shows a CO loss carryforward to 2022 of -$17,000 (-$42,000 loss on that property, less $25,000). So, it appears as though a potential -$25,000 CO rental loss carryforward is basically being wasted. Is this correct? I don't understand why it is "using" a loss carryforward when there is no other CO income for it to be used against.
Interestingly, when I did an experiment and specified that the rental was "not as passive activity" it wasted the entire -$42,000 rental loss (for CO) with no carryforward. It seems odd that a passive activity would actually be beneficial here, in that it is carrying forward losses in excess of the $25,000 passive limit.
On CO DR-104PN, line 17 the Colorado-source income (loss) is shown as -$25,000. The total federal Schedule E loss reported on line 16 of DR-104PN is -$61,120.
The general info tab shows a CO loss carryforward to 2022 of -$17,000 (-$42,000 loss on that property, less $25,000). So, it appears as though a potential -$25,000 CO rental loss carryforward is basically being wasted. Is this correct? I don't understand why it is "using" a loss carryforward when there is no other CO income for it to be used against.
Interestingly, when I did an experiment and specified that the rental was "not as passive activity" it wasted the entire -$42,000 rental loss (for CO) with no carryforward. It seems odd that a passive activity would actually be beneficial here, in that it is carrying forward losses in excess of the $25,000 passive limit.
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