New Jersey BUS-2 Loss Carry Forward

Forum|Forum|3 months ago
March 20, 2026
2 replies
21 views

Taxpayer is a non-resident of NJ. Sold rental property in 2025 which released a federal passive loss of about $84,000 on the federal return. NJ N/R return is taxing the capital gain of the property (as it should) and carrying forward the passive activity losses to 2026.

Does NJ not release passive activity losses when the property is sold? Or am I just missing a box to check in ProSeries?

ProSeries Professional

GodFather

Intuit Community Champion

I hope the information I[ve attached helps.

D

DrKRobertsAuthor

Level 3

Ok, so it's a NJ thing. This is the first year we are doing the return and the 2024 NJ return (NJ-BUS-2, Part III, Line 12) is showing a capital loss carrying forward to 2025. So that figure really means nothing. It's really a "use it or lose it" situation. If he had no other passive or active income to offset that loss in the year the loss occurred, then it's just lost.

Thank you

Skylane

Intuit Community Champion

Correct,,, it’s a NJ thing

If at first you don’t succeed…..find a workaround

N

Nancy9

Level 4

MORONEY v. DIRECTOR DIVISION OF TAXATION (2005)

Check this case out. It's about loss not being able to be taken in NJ over the years. Any of the loss that can be attributed to depreciation (that didn't offset other rental income) can be reported as an increase in basis when the property is sold. I'm paraphrasing so read the decision to get full details.

MORONEY v. DIRECTOR DIVISION OF TAXATION (2005) | FindLaw

Accountant-Man

Level 13

I just re-looked this up for a friend. Moroney says that the tax benefit rule for the rental's depreciation applies. Prior to Moroney NJ did not allow the tax benefit rule.

Enter it as an adjustment to the gain(reducing the gain by increasing the adjusted basis) on sale.

** I'm still a champion... of the world! Even without The Lounge.

MORONEY v. DIRECTOR DIVISION OF TAXATION (2005)

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