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Generating 8582 for Rental with loss

cera smile
Level 1

I have a client with a rental that they had a loss of 54,698. I am trying to generate an 8582 to limit the amount of Passive Activity Loss to 25,000 so that it will flow over to 8995, and create a carryforward QBI deduction. I previously used Lacerte, now using Pro Series, I think there is a box I am missing but I cannot figure it out. I calculated it the old fashioned way with pencil and paper and know this is how it needs to be filed. There must be a box in the software I am missing. (I used Lacerte previously and am new to Pro Series)

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14 Replies 14
TaxReturnPros
Level 3

If a rental, it's the Active Participation Box on Sech E worksheet

TaxGuyBill
Level 14

@cera smile wrote:

 I am trying to generate an 8582 to limit the amount of Passive Activity Loss to 25,000


 

Are you saying it is currently allowing the ENTIRE loss, rather than just $25,000?

As a side note, a $54,000 loss for one year is extremely large, so you may want to verify that is correct and that something like depreciable improvements are not being deducted.

cera smile
Level 1

Yes, it is trying to report the ENTIRE amount. The loss is because it is a complex of cabins, many of which had to be completely remodeled (first year owning this property).

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abctax55
Level 15

Were these units that were undergoing "major" remodeling actually available for rent?

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cera smile
Level 1

Yes. They were once repairs were made.

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abctax55
Level 15

OK, one more time then I give up:

WERE they AVAILABLE *while* the renovations were being done?  NOT - were they available after the renovations were done.

If the units were NOT available while the extensive renovations were being done, then it is very possible the costs incurred during that time are NOT immediately deductible.  

You need to do research on whether this applies in your client's situation, depending on the specific facts & circumstances. 

As Bill pointed out, $45000 in 'repairs' is a large amount in most cases (even here in pricy CA). 

And can we assume you are familiar the the TPR's (Tangible Propery Regs) that came out few years ago?  

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cera smile
Level 1

Yes, familiar. I will research that more in depth. Thank you!

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TaxGuyBill
Level 14
  1. Are you reporting this on the Schedule E worksheet?
  2. Is there other passive income on the tax return?
  3. Are there any personal days?
  4. Is Box G or H checked?
  5. On the "Info Wks" (the first sheet where you enter the taxpayer's name, SSN, etc.), scroll about 80% down, and check that the Real Estate Professional box is NOT checked.

 

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cera smile
Level 1

The only other "income" is another rental which had a loss of about 2000. Yes they were available for rent part of the year, once the repairs were done. 

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abctax55
Level 15

they were available for rent part of the year, once the repairs were done. 

OK... but were they "available for rent" while they were being renovated?   It can be an important distinction that you need to consider.

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

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cera smile
Level 1

Yes, exactly except joint ownership

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TaxGuyBill
Level 14

Hmmmm.  I'm puzzled why it is allowing the entire loss.

Just to triple-check ... Line 22 of Schedule E is showing the entire $54,000-ish loss, right?

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cera smile
Level 1

Yes, that is the problem. Like I said, I even printed and did it all paper and pencil and I KNOW it should be limited to 25,000 for that property. 

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sjrcpa
Level 15

Does this qualify for the $25k exception? Residential rental or transient lodging?


ex-AllStar
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