We will repeat your questions below, followed by our response.
Jack filled Form 4797 for sale of the rental property, which transferred the information to Schedule D. Schedule showed a gain = 100k (net gain for sale of the rental property C) - 30k (loss from selling stock D) = 70k. Is this correct way to handle this?
Yes, the sale of the rental property resulted in capital gain income and the sale of the stock resulting in a capital loss. Capital losses will offset capital gains. To the extent capital losses exceed capital gains, the excess capital loss is carried over indefinitely. Although, capital losses can offset up to $3,000 of ordinary income ($1,500 of ordinary income if married filing separately).
Can the K-1 passive losses (losses from 2022 and disallowed losses from prior years) for Investments A and B be used to offset the 70k mentioned above? If so, how will you handle this in TurboTax?
No, because you have not sold investments A or B. The rule regarding when passive losses can be characterized as losses not from a passive activity essentially happens when a taxpayer disposes of their entire interest in the passive activity. Note, that if you should sell the A or B investment in the future, your ability to deduct any suspended losses will depend on whether you have a basis in these investments. If you have no basis, then any suspended losses cannot be used to offset future income. In other words, the loss becomes permanent. Thus, for timing purposes, you might want to make sure you have a basis in investments A and B. You can review your basis information on the Schedule K-1s you receive from the general/managing partner.
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