Christian Posted March 3 Report Share Posted March 3 A client couple has approximately $192,000 in modified AGI for 2023. They have a rental loss of some $6,500 for last year. ATX shows none of this loss as deductible even though I checked box 8 for active participation. In doing the math $192,000 - $150,000 = $42,000. $42,000 times 50% = $21,000 of the $25,000 loss allowed if their MAGI was less than $150,000. $25,000 - $21,000 = $4,000. ATX does not show the $4,000 as an allowed deductible loss on Form 8582 with the remaining $2,500 loss carried to next year. Have I missed a toggle or what ? Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 3 Report Share Posted March 3 The $25,000 begins to phase out when MAGI exceeds $100K and is completely eliminated when MAGI reaches $150K. I don't think you are using MAGI and the loss properly in your calculation above to figure the allowed portion of the loss. ATX should have a worksheet that shows the calculation of MAGI and also the phase-out and/or allowed portion of the loss. Here is a link to the 8582 instructions. A description of the calculation for MAGI is found under the heading "Part II - Special Allowance for Rental Real Estate Activities With Active Participation" https://www.irs.gov/instructions/i8582#en_US_2023_publink1000278151 2 Quote Link to comment Share on other sites More sharing options...
Christian Posted March 3 Author Report Share Posted March 3 Well then at their modified AGI they do not get any deductible loss and have to carry it forward. My thinking was that a married couple had a limit of $150,000 before the $25,000 began to phase out. The $100,000 limit applies to couples ? The $75,000 limit applies to singles ? No rental clients I have dealt with ever reached the applicable limit on the $25,000 allowed so regrettably I must have misread the applicable limits. I thank you for clearing this up and will review the material referenced by you. The 8582 clearly shows that when their $192,000 AGI is subtracted from the $150,000 limit wallah they get no allowed loss for 2023. I am assuming going forward the loss can be applied to years in which they show a rental profit. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 3 Report Share Posted March 3 (edited) 21 hours ago, Christian said: Well then at their modified AGI they do not get any deductible loss and have to carry it forward. Correct 21 hours ago, Christian said: The $100,000 limit applies to couples ? Yes, for MFJ the lower limit where phase out begins is $100K and the potential to claim any loss under this special provision is phased out at $150K. Basically the potential $25K loss allowance phases out at $1 for every $2 when MAGI starts to exceed $100K. Those amounts are halved for singles and MFS living apart all year. Edited March 4 by jklcpa strikethrough "singles and" 2 Quote Link to comment Share on other sites More sharing options...
Christian Posted March 4 Author Report Share Posted March 4 So the phase out limit for singles begins at $50,000 which is of course one half of the MFJ amount of $100,000 ? Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 4 Report Share Posted March 4 15 minutes ago, Christian said: So the phase out limit for singles begins at $50,000 which is of course one half of the MFJ amount of $100,000 ? Oops, no, I'm sorry. I put a strikethrough on "singles and" in my post above. The amount for singles is the same as MFJ. The limits are halved for MFS living apart all year. Single would still phase out at the $150K. 1 Quote Link to comment Share on other sites More sharing options...
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