All Forum Posts by: Buddy Holmes

I forgot.  the real reason is that the LTCG was from a 1031 exchange so considered from tax deferred $ and there for not able to be offset.

Cheers,

Buddy

Thanks for the note. The passive losses are from DST and LP syndication losses which are truly passive RE losses.

Cheers,

Buddy 

So I should be able to off set?

Amen!

Good advice!

Help please in learning how passive losses can offset Cap Gains.

I watched Brandon Hall's great #45 Daily Smart Tax video but my Turbo Tax seems to have a different opinion.

Form 8582 calculates Passive loss Limitations.

I have rental homes with PM but active participation. Their net loss was $11,452

I have DSTs and LP with total passive participation. Their net loss was $29,319

One of my Passive DST's was sold and I did a 1031 exchange but took $13,000 out.

I thought the $13000 LTCG would be off set by the passive loss I had carried forward. 

Turbo Tax separated the two and both had net losses.

My AGI was low enough to allow up to $21,805 in deduction, but…

The rental homes loss was less than the passive-passive loss so it was used to compare to the $21805 to reduce income by the lower value of $11,454 which was placed on the 1040

Part III goes on to calculate “Total Losses Allowed”

It sums the net income of the active and passive, passive activities on Line 10

Then Line 10 adds this to Line 9 which was the overall net of only the smaller active passive loss. It call this the “TOTAL losses Allowed” and to see instructions on how to report on your 1040? Turbo Tax evidently didn’t understand the instructions either because I can not find where it is used. Instructions say “use parts IV through IX and related instructions…” First I don’t have a Part IX on my Form 8582

Looks like the $29,319 will be carried over to next year. But why can't I off set a $13,000 LTCG which was taken out of the 1031 exchange of a passive investment?

Cheers,

Buddy

The jab is fine. TT has served me well, even their Audit Defense was very effective in supporting me in an audit that ended in arbitration prior to tax court. I concur in GIGO and most likely my input error. GLAD you confirmed it should be offset.

One issue unspoken is my rental passive losses are larger than my DST passive losses so TT and IRS FORM 8524 seems to allow DST losses to offset DST gains, but then jumps to rental losses. First rental losses off set rental gains and then any leftover goes toward income as limited by AGI 100-150K LIMITS. That goes to Sched 1 and reduced by a state tax refund from last years return. The rest on rental loss is held for future use along with DST loss remains after covering DST gains.

If anybody can tell why they are held in separate categories that would be great. All my rentals have PM.

The small cash out from a 1031 exchange, that TT works out fine.     TT has both the exchanged and the replacement DSTs and calculated the cash out boot correctly. But TT places it into capital gains and carries it to the 1040 as a LTCG without any offset??

 @Michael Plaks  Please confirm that it indeed should be offset. I appreciate your reply.

Cheers

BUDDY

Amen!

I have a tax question about passive RE losses and LTCG's from sale of passive RE investments.

Specifically this year I have a small cash out of a 1031 exchange of DST'S (Delaware Statutory Trust).

I have net passive losses from other passive RE investments of DSTs.

I have net losses from rental properties which the IRS seems to treat as passive losses but separately from those above.

HOWEVER, neither of these categories of losses offset the smaller long term capital gain from the 1031 exchange?

This seems counter to what I have read and heard in various sources.

I am using Turbo Tax Premier.  No TURBO TAX BASHING PLEASE.

Cheers.

I am retired, no W2, but have pension and SSA INCOME.

I HAVE RENTAL PROPERTIES W/ PM'S AND PASSIVE INCOME FROM DSTs AND SYNDICATIONS.

Can I qualify for QBI?

I consider RE INVESTING TO BE MY BUSINESS.  Does the IRS?

Cheers