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partnership sold at a loss and suspended capital loss carryovers being allowed

Level 3

If a taxpayer sells a partnership for a loss and has suspended passive loss carryovers, are those losses allowed? I thought they would be only if the partnership was sold for a gain. The system is allowing them.

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3 Replies 3
Level 9
Level 9

An entire disposition of a passive activity in a taxable transaction frees up losses from that activity.

Level 3


A follow up question...

A partnership sells the only passive activity, but still exists. How can I tell Lacerte to deduct the suspended passive activity losses on the individual return without checking the box delete next year, final K-1?

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Level 15

Don't think you can. Your client has not disposed of the activity that generated the passive loss (the partnership did).

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