Suspended Passive Losses

4 Replies

Hello all! I have a tax return related question for the community. I have invested in a few multifamily syndications since 2018 that provide yearly K1’s. I just now noticed that my suspended losses from prior years was not shown on the last 3 years of tax returns (Form 8582 Item 3c)… This hasn’t been an issue yet as none of the deals have sold, but they may sell soon and this will be a problem where I can’t use the losses to offset the gains. My question is, do I need to amend the last 3 years worth of tax returns to correct this small issue, or can I just input the correct amount on Form 8582 in my 2021 tax return going forward? 

Thanks in advance!

Originally posted by @Zach Heine :

Hello all! I have a tax return related question for the community. I have invested in a few multifamily syndications since 2018 that provide yearly K1’s. I just now noticed that my suspended losses from prior years was not shown on the last 3 years of tax returns (Form 8582 Item 3c)… This hasn’t been an issue yet as none of the deals have sold, but they may sell soon and this will be a problem where I can’t use the losses to offset the gains. My question is, do I need to amend the last 3 years worth of tax returns to correct this small issue, or can I just input the correct amount on Form 8582 in my 2021 tax return going forward? 

Thanks in advance!

Unfortunately, you need to amend your return to fix this issue. 

Looks like you need an investor friendly CPA lol.

I noticed that a lot of CPAs do that form not with a computer and instead old school. And a lot of them never give the worksheet to you so they know when you are shopping for a new cpa. 

@Zach Heine

Unfortunately, you will need to amend the prior year's return to include the 8582.

the only thing I can think of 'potentially' is that the tax preparer incorrectly listed the income as 'non-passive' and took the losses when they shouldn't have.

you may want to have a review of your tax returns done.

I disagree that an amended return is required to be filed. As long as the losses were factually suspended and your income was correct, the Form 8582 is just a computational form. So while, yes, it should have been included with the return, an administrative error does not mean you lose the suspended loss carryover. You'll need to make sure you have the records to back up the carryover in case they ask.