Have Tax Questions? Ask a Tax Expert for Answers ASAP
You are correct that the activity is a passive activity.
You have a loss here and since it is a passive activity and you are not participating (you are using a rental company) you cannot deduct the net loss, the loss of 3007 gets carried forward to the next tax year.
You would want to file the 8582 to calculate the net loss and show that you cannot deduct it, this form can be used as support for your return next year when you can claim the loss if you have passive income.
and I can't even deduct the $7146 part of the expenses from the income of the same amount?
I am a little confused, I am assuming here that you have 7146 of income and 10153 of deductions leaving a net loss of 3007. You can only deduct up to 7146 this year. Therefore the remaining 3007 of deductions get carried forward to the next tax year.
so thats the question, if I can deduct any of my expenses to offset the income. The 3007 is the excess which I know must be carried over, but my original question is about where these figures (7146 income, 10153 expenses) go on form 8582? The income is shown on the K-1 from the partnership, and the expenses are all my costs of owning the unit.
The way 8582 is set up is frustrating.
I hear ya, let me check the 8582, I'll be right back
Ok so basically on the 8582:
Line 3a = 7146
line 3b 10153
line 3 c 0
3d & line 4 = -3007
skip parts II and III
line 15 = 7146
That's it, the form is then filed with your return to show that you have a 3007 passive loss carry forward.
I agree thats the only way it would seem to work, I think my confusion is due to the term NET ... cause based on my teaching and experience Net would mean the income minus the expenses, which is the 3007 and with no income listed (since it was net-ted out) none of the rest of the form goes anywhere, if you know what i mean.
But I still need to do worksheets 3, 5 &6 as well, correct?
I understand. Basically you get to the net on line 3 d.
only worksheet 3 and 5, not 6. You dont have any allowed losses.
I wouldn't bother with worksheet 6 either since you dont have any other activities. These worksheets arent required to be completed to make your return complete.
and list the 7146 on sched E under passive losses.
No it would go under passive income on page 2 of the schedule E because you got a K1 for it. Part II line 28 column G
Then your unreimbursed expenses are reported on a seperate line on the Schedule E page 2 part II and reported in column f but only up to the amount of your income. You do not want to report all the deductions on Schedule E only 7146.
The 8582 shows your carry forward loss of 3007.
This is a little confusing because you have unreimbursed partnership expenses. Note that the description you use for this on part II should be "UPE" per the IRS instructions.
thats what I meant ... so both column f and g have values 7146 and net each other out to $0 by line 32 sched E.
In this instance yes, because you have UPE, you have to adjust your UPE on the Schedule E page 2 to not overdeduct and take the loss that's not allowed.
Are you good? it's getting a little late and I am ready to sign out but just want to make sure you are good before I leave since the deadline is tomorrow.
So in Part 2 of E I would have 2 items ... row A for the partnership income and a row B for the UPE
thanx much and have a good night ...
no prob. :)