PARTNERSHIP SHORT TERM RENTAL LOSS OVER $25,000

[Marie]

CLIENT IS IN A CAMPGROUND AND ONE HOUSE RENTAL PARTNERSHIP.  1ST YEAR LOSS OVER $50,000.  When I put it on the Sch E page 2, it allows t he total loss.  is this correct?  Is the short term rental SE liable? 

[jklcpa]

I have questions rather than answers -

Is this one partnership?  If one, how is there SE income if it has a loss?  Is income subject to SE on the K-1?  Are the activities separately reported and then aggregated into one K-1?

What boxes are checked for participation, active or passive?

Did you include form 8582 in the return?

Is there some other income or gain related to this partnership during the year that is allowing the higher loss?  Was it disposed of during the year?

[Lee B]

20 minutes ago, jklcpa said:

I have questions rather than answers -

 

Marie you post is too condensed and short on information for anyone to answer.

[Marie]

1st year, only losses.  campground and vrbo is the same entity.  It is mostly a campground for  horse people who want to camp and ride their horses on tralls. 

No services except showers, water, electricity, internet, etc.  It is active participation for both partners.  One partner has other SE income on his individual return, so this could reduce  his SE liability if the campground is considered SE income  

[Lee B]

8 minutes ago, Marie said:

 It is mostly a campground for  horse people who want to camp and ride their horses on tralls. 

No services except showers, water, electricity, internet, etc.  It is active participation for both partners.  One partner has other SE income on his individual return, so this could reduce  his SE liability if the campground is considered SE income  

Doesn't sound like SE income (loss) due to lack of services.

[Marie]

ok, that is what I thought, but when I read info it sounded like short term rentals were SE income.

When I put the loss on Sch e page 2, it allowed all $50,000 loss for the one partner who is the majority owner.  Is that correct?  

[jklcpa]

20 minutes ago, Marie said:

When I put the loss on Sch e page 2, it allowed all $50,000 loss for the one partner who is the majority owner.  Is that correct?  

That depends. Again, did you include 8582 in the return? Does the partner have other passive income? Does he have other income or gain from this partnership that is allowing that loss in full?

 

 

[jklcpa]

Also, is this showing up on Sch E, page 2, UNDER PASSIVE LOSS IN COL G?

[Lee B]

39 minutes ago, Marie said:

 

When I put the loss on Sch e page 2, it allowed all $50,000 loss for the one partner who is the majority owner.  Is that correct?  

Hmm, I would doublecheck the way that you set up your partners K 1 information

[Marie]

He has capital gains and gains on his 4797 ( individual return).  the 8592 doesn't show any carryover of losses .  no amounts under passive loss in col g

[jklcpa]

Marie, please see the instructions for form 8582 under "who must file," "rental activities", "special allowance for rental real estate activities," and the 5 "Exceptions" under "Rental activities" beginning on page 3 to determine if you should be checking the box on the sch E input for "active participation".  As you read, keep in mind that there are differences in the definitions of "active" and "material" participation.

If you check the box A as "active" participation, it will not allow any of the loss and should show -0- in col G and generate the 8582 worksheet with 8582 line 1d being -0- and 8582 line 3 being the -50K. Then the bottom of that is the lesser of 1d or 3, allowing -0- loss.

Right now I think you have it allowing the default of Sch E, box D, and it is allowing the full $50K loss to show up in col i on pg 2 of Sch E as nonpassive.

 

 

[Marie]

ok, i will review, thanks