How to generate the reconciliation on Line 43 on Schedule E for a real estate professional who meets the qualification to take losses and not as disallowed passive loss?

Forum|Forum|4 years ago
September 12, 2021
1 reply
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I have already checked "Real Estate Professional" box and marked as "Nonpassive activity". But losses still calculated as passive losses. Can someone please help?

Per Sec. 469(c)(7)B), real estate professional who materially participate in real property trades or business will not be subject to the rule where rental activities are treated as passive.

ProConnect Tax

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Best answer by George4Tacks

The client was a real estate professional. They bought a piece real estate which they spent a lot of time and money on repair while collecting rent. There was a large rental loss. The rental loss was so large that their ordinary income and other income was not enough to offset the loss. (the loss was nonpassive which can be used to lower their ordinary income because they are real estate professional and materially participated). I used ProSeries last year. In last year’s return, there was NOL in the Carryover Worksheet.

The only place I think the NOL should be reported is under “Income” then under “Net Operating Loss” in the “Federal Net Operating Loss” screen in ProConnect.

I am sorry for the confusion. I hope this makes sense. Please let me know what you think. Thank you.

Did you elect to NOT carry the NOL back in the prior year? Without the election to waive the carryback, you would need to carry any NOL back 5 years. https://www.irs.gov/pub/irs-pdf/p536.pdf

If there truly is a remaining NOL, you would need to enter the carryovers by year in Income > Federal Net Operating Loss and also for the state (which is likely a different number)

T

Terry53029

Intuit Community Champion

Did you also mark the "material participates" box

V

vivianl78Author

Level 2

It looks like the “Nonpassive activity” box is for martially participated. And the reconciliation on Line 43 on Schedule E for real estate professional calculated just fine. But my client had Nonpassive loss from previous year and I am not sure where to enter the Nonpassive loss carryforward in ProConnect. Do you know how to report the prior year Nonpassive loss carryforward for a real estate professional on 1040? Thank you!

George4Tacks

Level 15

How was this non passive loss carryover generated? Was the client not a real estate professional in prior years? If they were, how is it that losses were not fully used? How do you know how much these losses were? Where did they show on the prior year return?

I am confused! Please help me to understand this situation.

Answers are easy. Questions are hard!

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