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Client did a 1031 exchange on a investment property with suspended loss in 2018. In 2019 Pro-series file, it has her claiming a portion of that loss. Is this appropriate to have Pro-Series keep on doing this?

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Level 2

So to recap:

-Client did a 1031 exchange in 2018

-Client is a real estate professional

-Client had a suspended loss on the property

-I did the 1031 through Pro-Series instructions (zeroing out most assets and doing the 1031 forms)

 

Pro-Series is showing the suspended loss in 2019, and she is able to claim a portion of it.  Is this correct?  She doesn't own the property anymore.  I figured we could just schedule a 0 income Schedule E and a portion would be deducted.  Reading online, it looks like if she did a boot maybe she could have claimed this suspended loss.

 

Or, should I move the suspended loss to the new 1031 property?

 

The thing is that since she doesn't own the property anymore I don't know if it is allowed to file a zero income Schedule E.

 

Thanks!

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3 Replies 3
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Level 15

a) Why is there a suspended passive loss if she is a real estate professional?

b) Since adjusted basis of old property becomes part of the basis of the new property, I would think the PAL c/o would "move" to the new property, too. I imagine 469 and/or its Regs address this.


ex-AllStar
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Level 2

She became a real estate professional later.  I just moved the passive loss to the new property.  I think that is allowed.  Let me know if I'm wrong in my thinking here. 

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Level 15

I would have to research it and I do not have time.

 


ex-AllStar
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