Instructions For Form 8582-Cr (Rev. December 2009) (Page 3 of 15) in pdf

actively participating in a

but less than $150,000 ($75,000 if

Trade or business activities

partnership’s rental real estate

married filing separately), your

without material participation. If

activity.

special allowance is limited to 50% of

you did not materially participate in a

the difference between $150,000

trade or business activity, the activity

A qualifying estate is the estate of

($75,000 if married filing separately)

is a passive activity. Generally, you

a decedent for tax years ending less

and your modified adjusted gross

must use Worksheet 4 on page 9 to

than 2 years after the date of the

income.

figure the amount to enter on Form

decedent’s death if the decedent

8582-CR for each trade or business

would have satisfied the active

Generally, if your modified

activity in which you did not materially

participation requirements for the

adjusted gross income is $150,000 or

participate. However, if you held the

rental real estate activity for the tax

more ($75,000 or more if married

activity through a PTP, special rules

year the decedent died.

filing separately), there is no special

apply. See Publicly Traded

allowance.

A qualified revocable trust may

Partnerships (PTPs) on page 14.

elect to be treated as part of a

However, for low-income housing

decedent’s estate for purposes of the

Material Participation

credits for property placed in service

special allowance for active

before 1990 and for rehabilitation

For the material participation tests

participation in rental real estate

credits, the limits on modified

that follow, participation generally

activities. The election must be made

adjusted gross income are increased.

includes any work done in connection

by both the executor (if any) of the

If your modified adjusted gross

with an activity if you owned an

decedent’s estate and the trustee of

income is more than $200,000

interest in the activity at the time you

the revocable trust. For details, see

($100,000 if married filing separately)

did the work. The capacity in which

Regulations section 1.645-1.

but less than $250,000 ($125,000 if

you did the work does not matter.

married filing separately), your

You are not considered to actively

However, work is not participation if:

special allowance is limited to 50% of

•

participate in a rental real estate

It is not work that an owner would

the difference between $250,000

activity if at any time during the tax

customarily do in the same type of

($125,000 if married filing separately)

year your interest (including your

activity, and

and your modified adjusted gross

•

spouse’s interest) in the activity was

One of your main reasons for doing

income.

less than 10% (by value) of all

the work was to avoid the

interests in the activity.

If your modified adjusted gross

disallowance of losses or credits from

Active participation is a less

income is $250,000 or more

the activity under the passive activity

stringent requirement than material

($125,000 or more if married filing

rules.

participation (see Material

separately), there is no special

Proof of participation. You may

Participation beginning on this page).

allowance.

prove your participation in an activity

You may be treated as actively

by any reasonable means. You do

No modified adjusted gross

participating if, for example, you

not have to maintain

income limitation applies when

participated in making management

contemporaneous daily time reports,

figuring the special allowance for

decisions or arranging for others to

logs, or similar documents if you can

low-income housing credits for

provide services (such as repairs) in

establish your participation by other

property placed in service after 1989

a significant and bona fide sense.

reasonable means. For this purpose,

(other than from a pass-through entity

Management decisions that may

reasonable means include, but are

in which you acquired your interest

count as active participation include:

not limited to, identifying services

before 1990).

•

Approving new tenants,

performed over a period of time and

•

Deciding on rental terms,

the approximate number of hours

Trade or Business

•

Approving capital or repair

spent performing the services during

expenditures, and

Activities

that period, based on appointment

•

Other similar decisions.

books, calendars, or narrative

A trade or business activity is an

The maximum special allowance

summaries.

activity (other than a rental activity or

is:

an activity treated as incidental to an

Tests for individuals. You

•

$25,000 for single individuals and

activity of holding property for

materially participated for the tax year

married individuals filing a joint return

investment) that:

in an activity if you satisfy at least one

for the tax year.

of the following tests.

1. Involves the conduct of a trade

•

$12,500 for married individuals

or business (within the meaning of

1. You participated in the activity

who file separate returns for the tax

section 162),

for more than 500 hours.

year and who lived apart from their

2. Is conducted in anticipation of

2. Your participation in the activity

spouses at all times during the tax

starting a trade or business, or

for the tax year was substantially all

year.

3. Involves research or

•

of the participation in the activity of all

$25,000 for a qualifying estate

experimental expenditures deductible

individuals (including individuals who

reduced by the special allowance for

under section 174 (or that would be if

did not own any interest in the

which the surviving spouse qualified.

you chose to deduct rather than

activity) for the year.

Modified adjusted gross income

capitalize them).

3. You participated in the activity

limitation. If your modified adjusted

for more than 100 hours during the

gross income (defined in the

tax year, and you participated at least

Reporting Credits

instructions for line 10 on page 10) is

as much as any other individual

From the Activities

$100,000 or less ($50,000 or less if

(including individuals who did not own

married filing separately), figure your

Trade or business activities with

any interest in the activity) for the

credits based on the amount of the

material participation. If you

year.

maximum special allowance referred

materially participated in a trade or

4. The activity is a significant

to in the preceding paragraph.

business activity, the activity is not a

participation activity for the tax year,

If your modified adjusted gross

passive activity. Report the credits

and you participated in all significant

income is more than $100,000

from the activity on the forms you

participation activities during the year

($50,000 if married filing separately)

normally use.

for more than 500 hours.

-3-

Instructions for Form 8582-CR (2009)

Instructions For Form 8582-Cr (Rev. December 2009) Page 3

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