To introduce the question, let's assume W2 income = $300k. This makes my marginal tax rate 35% with the 2024 brackets.
If I participate in a real estate syndication by putting in $100,000 where I receive a K1 for 4 years before it dissolves with income in those years of:
Year 1: -$20,000 passive loss
Year 2: -$10,000 passive loss
Year 3: $10,000 distribution (starting to repay that initial investment)
Year 4: $200,000 distribution on the sale of the property and partnership is dissolved
Can those $30k of past passive losses be used against W2 income in Year 4? I've read in a few places online that they become "active" when the final K1 dissolves the partnership.
How is the unrecaptured section 1250 gain treated in this scenario? I saw online that the recapture is capped at 25% which should be advantageous if I can write off the $30k of losses against my 35% marginal tax rate and only pay the 25% recapture rate. Is this accurate?
