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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12690
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I 't believe I asked my question correctly regarding

Customer Question

Hello
I don't believe I asked my question correctly regarding passive loss carryover.So that I understand correctly, since 2009 our AGI has exceeded $150K. We still have been generating passive loss, but it's been reduced to zero b/c of our income. Is this correct? Up through 2009 our AGI was less that $150K and we accumulated $23,000 in passive loss that have continued to carryover and we can claim when we sell. However, the losses since then, though generated, cannot be claimed b/c our of our income level?Also, on our 2015 return ATM carry forwards of $3,700 showed up. What is this and how does it factor into the whole scheme of things?
Thank you
Denise Sullivan
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

OK,

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What we're talking about here is passive activities and the passive loss limitation ... which,yes, can finally be used when you dispose of the property.

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There IS a special ability to use 25,000 IF your income is below 100,000 and then it phases out (less and less becomes deductible) as you reach 150,000.

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Also there are some other rules... you have to have at least a 10% interest and you can't be filing separately.

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This all refers to the special 25,000 allowance.

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Otherwise (over the 150K you mention EVERYTHING passive loss that's more than passive income) is carried forward until sale.

Expert:  Lane replied 1 year ago.

Here's a great overview of passive activities from intuit:

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As a general rule, rental properties are, by definition, passive activities and are subject to the passive activity loss rules.

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These rules are quite complex. In general, the passive activity rules limit your ability to offset other types of income with net passive losses. But the good news is there is an exception: If you actively participate in a rental real estate activity, you can deduct up to $25,000 of your rental loss even though it’s passive.

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To actively participate means that you own at least 10% of the property, and you make major management decisions, such as approving new tenants, setting rental terms, approving improvements and so forth. (No, you don't have to mow the lawn or answer middle-of-the-night phone calls from tenants about a backed-up toilet.)

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But this exception phases out as your income rises. If you have modified Adjusted Gross Income over $100,000, the $25,000 rental real estate exception decreases by $0.50 for every dollar over $100,000. The exception is completely phased out when your modified adjusted gross income reaches $150,000.

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Customer: replied 1 year ago.
Thank you, ***** ***** we sell the property this year, though we can claim the passive loss, it won't count for anything b/c our AGI over $150k?Also, what ATMT carryover?
Expert:  Lane replied 1 year ago.

No, the [release of suspended] passive loss carryover [and being able to use against all other income ] UPON SALE has NOTHING to do with the suspension of those losses while the activity is ongoing.

Expert:  Lane replied 1 year ago.

If your accountant provided you with worksheets or statements, they will be at the back of the tax return. You will also see the carryovers on form 8582. One form will be for ordinary passive loss carryovers, the other for alternative minimum tax will be stated as such at the top of the form.

Expert:  Lane replied 1 year ago.

Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit")

I know it takes an extra step, but JustAnswer won’t credit us for the work until you rate.

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Thank you!

Lane

I hold a law degree (JD, Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice on three continents, since 1986.