I have a client that has a small commercial building with loses for the first 3 years. Do I carryforward each years loss and where is this entered.
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Husband & wife have a partnership (Form 1065) and in 2017 purchases a small commercial rental. They are classified as Active Participants and this is the only passive activity they have. They have had losses each year and probably will do so for the next several years. Do I carryover the NOL from one year to the next or are they required to have income from passive activities in the same year as losses in order to carryforward the excess losses is any?
You say the client has loses for the first 3 years - Is this the first year you're preparing this client's return? The returns for the previous years, if prepared correctly, should have Form 8582 attached showing what loss was allowed or unallowed to be carried forward.
George, since the losses came from the 1065 K-1, they would have appeared on the Sch E page 2 had they been allowed. They were suspended, so they were not used in the original years, and they belong on the Sch K-1 worksheet for this year, page 3, section A, lines 1 etc.