If a PTP has a current-year gain, and an accumulated passive loss, can I treat the entire gain as non-passive (taxable) income, and thereby retain the loss for future use?
- posted
7 years ago
PTP: can I opt not to apply passive loss?
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- posted
7 years ago
No. Additionally, see pages 13 and 14 in the instructions for IRS Form
8582 as PTPs are unique when it comes to using passive income and losses.- Vote on answer
- posted
7 years ago
Could you elaborate? ISTM, that would mean either (a) Passive loss reporting is mandated, if there is gain to take it against; or (b) If the loss isn't reported, it evaporates.
These seem severe (and straightforward) enough that I think I would have come across them in the K1 Partners' Instructions or Pub 925. I have not.
(Well, I'll say I've read that (and Pub 925, which I think says the same stuff. How well I've understood everything is another matter.)
Thank you.
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- posted
7 years ago
Original reply was accidentally sent to OP. Here it is.
I don't know how to elaborate any more. The law makes no provision for you to pick and choose what is passive and active. It provides the criteria. If the criteria determines you have passive income, it goes on the same form as your passive losses for offset. Any unused loss carries forward.
As to the instructions.... PTPs are unique. You can only use the PTP passive loss against the PTP passive income. This is different then other passive losses where a loss on one type of investment can be used against passive income from another type of investment. Any unused PTP loss gets carried forward.