Problem:
The “rental real estate with active participation” box is checked and followed gosystem instructions below indicated. However, we are not able to take a deduction of rental loss < $25k in form 8582 part II.
Solution:
The IRS instruction for Form 8582 states that: If you actively participated in a passive rental real estate activity, you may be able to deduct up to $25000 of loss from the activity from your nonpassive income. Only an individual, a qualifying estate, or a qualified revocable trust that made an election to treat the trust as part of the decedent's estate may actively participate in a rental real estate activity. A qualifying estate is the estate of a decedent for tax years ending less than two (2) years after the date of the decedent's death if the decedent would have satisfied the active participation requirements for the rental real estate activity for the tax year in which the decedent died. A qualified revocable trust may elect to be treated as part of a decedent's estate for purposes of the special allowance for active participation in rental real estate activities. The election must be made by both the executor of the decedent's estate and the trustee of the revocable trust. (Regulation 1.645-1)
1. Go to Organizer | Income | Rent and Royalty | Rent and Royalty information | Activity information tab, click the HELP Rental Real Estate with Activity Participation, if the client want to populate F8582 line 1, need to be a qualifying estate and less than two years.
2. If you change the date entity created at Organizer | General Information | Basic Return Information | Entity Information | To be within two years of the current year. The form 8582 will populate.
3. Otherwise, Override can be made under:
Organizer | Deductions | Investment Interest Expense | Investment Interest Limitation | Net Investment Income enter amounts here.