Instructions For Form 8810 - Corporate Passive Activity Loss And Credit Limitations - 2010 Page 6
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12Unallowed passive activity credits, unlike
former passive activity, report the income,
Form 4797, Sales of Business
unallowed PALs, are not allowable when the
gains, deductions, and losses (including
Property
corporation disposes of its interest in an
prior year unallowed losses) on the forms
When the corporation completely disposes
activity. However, the corporation can elect
and schedules normally used, but do not
to increase the basis of the credit property
of an entire interest in a passive activity or a
enter them on the worksheets or on Form
by the amount of the original basis reduction
former passive activity, there may be net
8810.
of the property to the extent that the credit
income or loss and prior year unallowed
has not been allowed under the passive
losses from the activity. All the income,
If the corporation has an overall loss
activity rules. Unallowed passive activity
gains, deductions, and losses are reported
when combining all income, gains,
credits that are not used to increase the
on the forms and schedules normally used.
basis of the credit property are carried
deductions, and losses (including any prior
forward until they are allowed. To make the
year unallowed losses) from the activity,
Combine all income, gains, deductions,
election, complete Part III of Form 8810. No
report all the income, gains, deductions, and
and losses (including any prior year
basis adjustment can be elected on a partial
losses on the forms and schedules normally
unallowed losses) from the activity for the
disposition of the corporation’s interest in a
used, but do not enter them on the
tax year to see if the corporation has an
passive activity.
worksheets or on Form 8810.
overall gain or loss.
A partner in a PTP is not treated as
having disposed of an entire interest in an
Note. Members of a consolidated group,
activity of a PTP until there is an entire
If the corporation has an overall gain
see Regulations section 1.469-1(h)(6) and
disposition of the partner’s interest in the
from a passive activity and also has other
Temporary Regulations sections
PTP.
passive activities to report on Form 8810,
1.469-1T(h)(7) and (8) for rules on applying
include the income, gains, deductions, and
Reporting an Entire Disposition
the PAL rules to dispositions of property and
losses (including prior year unallowed
on Schedule D (Form 1120),
other intercompany transactions.
losses) on Worksheet 1 on page 7. If this is
Capital Gains and Losses, or
the corporation’s only passive activity or a
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Instructions for Form 8810 (2010)
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