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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16580
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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When a taxpayer disposes of his or her entire interest in a

Customer Question

When a taxpayer disposes of his or her entire interest in a passive activity, how are any prior-year unallowed passive activity losses treated?
Submitted: 3 years ago.
Category: Tax
Expert:  Megan C replied 3 years ago.

Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

How are you today?

Megan C :

According to tax topic 425, accessible HERE, you can take all the previously suspended losses in the year you dispose of the property.

Megan C :

Here's the link (sorry I didn't add it) CLICK HERE

Megan C and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

I am fine.

 

Expert:  Megan C replied 3 years ago.

Thanks for your follow up.

 

When a taxpayer disposes of a passive activity, the previously suspended losses are allowed to be taken in the current year. You can view tax topic 425, available HERE which spells this out.

 

Please let me know if you have any further questions. Thanks for the positive rating, by the way.

Customer: replied 3 years ago.

Megan,

 

Here are the choices:

 

They are combine with current year passive activity gain or loss to determine overall gain or loss

 

the prior year unallowd passive activity losses are deducted against ordinary income up to $3000 and carried forward until depleted

 

the prior year unallowed passive activity losses are permanently disallowed

 

the prior year unallowed passive activity losses can only be carried forward to offset any future passive activity gains

 

Any thoughts?

Expert:  Megan C replied 3 years ago.
Diana,

Thanks for your follow up. The answer is They are combine with current year passive activity gain or loss to determine overall gain or loss

The second option is the treatment of capital losses
The third option is incorrect
and the fourth option is how passive activity losses are handled before the year of disposal.

Please let me know if you need anything additional. If not, please rate as "excellent" so that I may receive credit for assisting you today.
Megan C and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

Wow, Meagan. I would have never considered that answer. Thank you very much.

 

 

Expert:  Megan C replied 3 years ago.
Diana,

Glad I could help! If you need anything else, please don't hesitate to contact me. Thanks for the positive rating and generous bonus.

Thanks again!
Customer: replied 3 years ago.

Hi Megan,

 

I did reply and I accepted. Additionally, I gave you a small tip for your quick response.

Expert:  Megan C replied 3 years ago.
Diana,

I thank you for your generosity. If you need anything else please don't hesitate to contact me, or ask for me directly. Thanks again
Expert:  Megan C replied 3 years ago.
Hey Diana I'm online don't know why that other expert said I wasn't. If you would like me to answer your question please just ask for me again or tell the expert that's answering the question that you would like me to answer your question.I'm so sorry for your trouble...Here's my direct link. If you ask your question here, it will only go to me http://www.justanswer.com/finance/expert-myvirtualcpa/Megan
Customer: replied 3 years ago.

Hi Megan,

 

Lane answered the question. Sorry.... As usual, I actually knew the answer. I just wanted confirmation.

 

By the way, I have a question for you. Do you ever review client memos, case analyses, etc.?

 

 

Expert:  Megan C replied 3 years ago.
Thanks for your message. If you request me directly, I'll be sure to give top quality service. And yes, I'll review your memos and analysis. I was trying to get to your last question but someone switched it to another category on me, I know that gets frustrating to you as a customer so that's why I provided a link for you. :)Have a great nightMegan