You Make the Call - Jan. 2, 2025

Question: Sandra has a publicly traded partnership (PTP) Schedule K-1 (Form 1065) with multiple PTP activities reported. One of the activities, Energy Partners LLP (a PTP), has a $5,000 loss in Box 1. Another activity, Blackstone Group (a PTP), has $6,000 of income in Box 1. Sandra is hopeful the loss from one activity can offset the gain from the other. Can the passive income from Blackstone Group offset the passive losses from Energy Partners, LLP?

Answer: No. Each PTP activity is treated on a stand-alone basis for passive activity loss purposes. This means that losses from one activity, including carryforwards, can only offset income from the same specific PTP. In other words, losses from Energy Partners LLP cannot offset the passive income from Blackstone Group, even though they are reported on the same Schedule K-1 (1065). Sandra will report $6,000 of passive income separately and a $5,000 suspended passive loss, currently non-deductible, which can only be used against future income from Energy Partners LLP.