Suspended Passive Activity Losses
I am preparing an individual 1040 tax return for a client who was divorced in 2007. The client & former spouse had owned a rental property since 2004 which showed a loss each year, but passive activity losses were suspended due to their AGI being greater than $150,000 each year. For 2007 I am filing a return for her only. The property was sold in 2007, therefore freeing up all aculated losses. Per the divorce decree, I am to claim 1/2 of 2007 rental revenue & expenses for her. Won't this "skew" the total amount of aculated losses to be reported? I am going under the assumption that I can claim only half of the suspended losses on her return. Would it be best to attach a spreadsheet, showing her half of losses that were suspended in each tax year?
