1040-US: Filing Status Optimization utility and rental real estate losses

Alerts and notices

Question

The taxpayer had a rental real estate loss on Schedule E of the joint return. When I enter the taxpayer's separate return after the return has been split, no rental loss is taken on the married filing separate taxpayer's return for rental income. Why?

Answer

Married persons filing separate returns who lived with their spouses at any time during the year are not eligible for the special $25,000 allowance for rental real estate with active participation. If your clients lived apart the entire year, enter X in the Married but lived apart entire year checkbox in the Filing Status Optimization dialog. UltraTax CS then calculates the loss.

Related topic: Filing Status Optimization utility FAQs (1040)