Tax question on loss carryforward, sched E vs D

[Mike Landry]

Hey guys.  I'm at a slight disagreement with my cpa and wanted to gather opinions. 

Is Schedule D ever used for passive real estate losses carried forward?  Does it have any affect.

I'll make up an example.

I have $5,000 rental passive unallowed losses carried forward form 2015.

I have $5,000 rental income for 2016. Assume same property.

Do the losses reduce my schedule E/8582 to $0

OR

Do I report my income of $5000 on my 1040 but than apply the losses to schedule D, which then limits me to $3000?

Does Schedule D have anything to do with passive rental losses from previous year?