Instructions for Form
Department of the Treasury
Internal Revenue Service
(Rev. December 2010)
For use with Form 8582–CR (Rev. December 2009)
Passive Activity Credit Limitations
Section references are to the Internal
Qualified plug-in electric and
conversion, rental, operation,
Revenue Code unless otherwise noted.
electric vehicle credit.
management, leasing, or brokerage
trade or business.
Overview of Form
Services you performed as an
employee are not treated as
The form contains six parts. The
performed in a real property trade or
Specific Instructions, starting on page
business unless you owned more
8, include, at the beginning of the
Disclosure requirements for
than 5% of the stock (or more than
instructions for each part, a brief
groupings. For tax years beginning
5% of the capital or profits interest) in
explanation of the purpose or use of
after January 24, 2010, disclosure
that part. These explanations give a
requirements for groupings of trade or
3. A working interest in an oil or
general overview of how the form
business activities or rental activities
gas well. Your working interest must
apply. See Disclosure Requirement
be held directly or through an entity
on page 5.
Also, as you read the instructions
that does not limit your liability (such
that follow, see Example of How To
Purpose of Form
as a general partner interest in a
Complete Form 8582-CR, beginning
partnership). In this case, it does not
Form 8582-CR is used by
on page 5. The example goes
matter whether you materially
noncorporate taxpayers to figure the
through a six-step analysis of how the
participated in the activity for the tax
amount of any passive activity credit
form and worksheets are completed
(PAC) for the current tax year
for a partner in a limited partnership
If, however, your liability was
(including any prior year unallowed
that has a low-income housing credit.
limited for part of the year (for
credits) and the amount of credit
example, you converted your general
Activities That Are Not
allowed for the current year. It also is
partner interest to a limited partner
used to make the election to increase
interest during the year), some of
the basis of credit property when a
your income and losses from the
taxpayer disposes of his or her
The following are not passive
working interest may be treated as
interest in an activity.
passive activity gross income and
PACs that are not allowed in the
1. Trade or business activities in
passive activity deductions. See
current year are carried forward until
which you materially participated for
Temporary Regulations section
they are allowed against the tax on
the tax year.
either net passive income or the
2. Any rental real estate activity in
4. The rental of a dwelling unit you
special allowance, if applicable.
which you materially participated if
used as a residence if section
you were a “real estate professional”
Different rules apply to your
280A(c)(5) applies. This section
for the tax year. You were a real
applies if you rented out a dwelling
activities and the related credit,
estate professional only if:
unit that you also used as a home
depending on the type of activity.
a. More than half of the personal
during the year for a number of days
Generally, passive activities include:
services you performed in trades or
that exceeds the greater of 14 days
Trade or business activities in
businesses during the tax year were
which you did not materially
or 10% of the number of days during
performed in real property trades or
the year that the home was rented at
participate for the tax year.
businesses in which you materially
a fair rental.
Rental activities, regardless of your
5. An activity of trading personal
b. You performed more than 750
property for the account of owners of
See Trade or Business Activities
hours of services during the tax year
interests in the activity. For purposes
on page 3 and Rental Activities
in real property trades or businesses
of this rule, personal property means
beginning on this page.
in which you materially participated.
property that is actively traded, such
For more information, see Pub.
For purposes of item (2), each
as stocks, bonds, and other
925, Passive Activity and At-Risk
interest in rental real estate is a
securities. See Temporary
separate activity unless you elect to
Regulations section 1.469-1T(e)(6).
Note. Corporations subject to the
treat all interests in rental real estate
passive activity rules must use Form
as one activity.
Generally, credits from these
8810, Corporate Passive Activity
activities are not entered on Form
If you are married filing jointly, one
Loss and Credit Limitations.
8582-CR. However, credits from
spouse must separately meet both
these activities may be subject to
(2)(a) and (2)(b) without taking into
Who Must File
limitations other than the passive
account services performed by the
credit limitation rules.
Form 8582-CR is filed by individuals,
estates, and trusts with any of the
A real property trade or business is
following credits from passive
any real property development,
A rental activity is a passive activity
General business credits.
even if you materially participated in
Cat. No. 64649B