Timeline for How to apply the basis limitation on a passive loss?
Current License: CC BY-SA 4.0
8 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Aug 7, 2022 at 16:13 | vote | accept | NewSites | ||
| Aug 7, 2022 at 2:57 | comment | added | NewSites | You're right that my taxes are complicated, including PFICs that most CPAs don't understand. Even before I had PFICs, I often found errors in CPAs' work, sometimes expensive errors, so I find that I'm better off investing the time to understand the forms and do it myself. | |
| Aug 7, 2022 at 2:51 | comment | added | NewSites | The basis has increased substantially from 2020 to 2021 due to PPP received. The instructions for Form 6198, pg 2, section "Part I—Current Year Profit (Loss) From the Activity, Including Prior Year Nondeductible Amounts" says, "If you have losses or deductions from an earlier tax year that you could not deduct because of the at-risk rules, include those amounts on the appropriate form or schedule of your current year tax return before starting Part I." That seems to be telling me that the amount that exceeds the basis in 2020 can be carried forward to 2021. | |
| Aug 6, 2022 at 22:43 | comment | added | littleadv | @NewSites nowhere, that's what "excluded" means. As a passive investor, you cannot lose more than you've invested, so if the loss exceeds your basis - the excess is non-deductible. | |
| Aug 6, 2022 at 20:20 | comment | added | NewSites | Can you tell me please where you believe the amount excluded by Form 6198 for a K-1 should be entered in the following year? | |
| Aug 6, 2022 at 19:07 | comment | added | littleadv | @NewSites I don't believe so. But it seems that your tax return is complicated enough for a professional assistance. I'd suggest you talk to a EA/CPA licensed in your state. | |
| Aug 6, 2022 at 12:13 | comment | added | NewSites | Thank you. Form 6198, line 21, says "See the instructions to find out how to report ... any carryover." The instructions for Form 6198 do not contain the word "carryover," but say on page 2, "If you have losses ... from an earlier tax year ..., include ... on the appropriate form ... of your current year tax ...." It gives an example with Sch C, but I don't use Sch C. So if Form 6198, line 5 is (9,000) and line 21 is (2,000) then I have $7k not allowed by this form. Do I then include that amount in the next year's Form 8582, Part V (or worksheet 3), column (c)? | |
| Aug 6, 2022 at 5:21 | history | answered | littleadv | CC BY-SA 4.0 |