1120-US: Suspended losses not allowed for a disposed corporation (FAQ)

Alerts and notices
Leave feedback

Contact information (optional):

Leave this blank:

Please tell us how we can make this information more helpful.


Characters left:

MFA required for electronic filing

Effective May 3rd, the 2017 version of UltraTax CS requires multi-factor authentication (MFA) to transmit e-files from CS Connect. Find out more.

Question

Why are suspended losses not being completely allowed for a corporation disposed of as a passive activity on the installment basis?

Answer

The rules for disposition of a passive activity on the installment basis are discussed in the instructions for Form 8810. If the activity is disposed of on the installment basis and it has an overall loss recognized in the current year, the current-year loss, and any carryover losses are only allowed to the gain recognized in the current year, divided by the unrecognized gain at the beginning of the year. If the activity has overall income recognized in the current year, all of the losses are released. If you want to release all the losses regardless of whether the activity has overall income or loss recognized in the current year, enter 1 in the Disposition of Activity field in the entity's input screen.

Related topics

Share This