ProSeries – How to handle suspended passive losses on related-party bargain sale/gift of rental property
I am preparing a 2025 MFJ return. The taxpayers transferred an entire rental property in a transaction that was part sale/part gift. One of the transferees is a related party, so I am not treating this as a fully taxable disposition that releases all suspended passive losses.
The rental has a $51,753 prior-year suspended passive loss carryover. ProSeries is currently carrying the entire $51,753 into the Schedule E worksheet and Form 8582, and because the taxpayers' AGI is above the special allowance phaseout, Form 8582 is allowing only the current rental income of $8,472 to absorb part of the suspended loss and carrying the remaining $43,281 forward.
I need to determine how ProSeries should handle the portion of the suspended PAL attributable to the gift/related-party portion of the disposition.
Is there a specific ProSeries entry for a related disposition passive loss carryover, or does the preparer need to manually split/reclassify the prior-year PAL carryover between the taxable-sale portion and the related-party/gift portion?
I see the Related Dispositions section on the Schedule E Activity Summary Smart Worksheet (lines J–N), including line L “Passive carryover loss,” but I cannot find an input field or cross-reference that feeds an amount into that section.
Where exactly in ProSeries Professional should this be entered?
