Department of the Treasury
Internal Revenue Service
Instructions for Form 8582
Passive Activity Loss Limitations
Section references are to the Internal
8810, Corporate Passive Activity Loss
Your modified adjusted gross income
and Credit Limitations.
was not more than $100,000 (not more
Revenue Code unless otherwise noted.
than $50,000 if married filing separately
Who Must File
and you lived apart from your spouse
Form 8582 is filed by individuals,
You do not hold any interest in a
estates, and trusts who have losses
rental real estate activity as a limited
Commercial revitalization deduction
(including prior year unallowed losses)
partner or as a beneficiary of an estate
(CRD). CRDs for rental real estate
from passive activities. You do not have
or a trust.
activities are not allowed for buildings
to file Form 8582 if you meet Exception
placed in service after December 31,
For the definition of modified
1 or 2 below.
2009. See Commercial revitalization
adjusted gross income, see the
deduction (CRD) on page 4.
instructions for line 7 on page 9.
Disclosure requirements for
You do not have an overall loss when
If all the above conditions are met,
groupings. For tax years beginning
you combine all your net income and
your rental real estate losses are not
after January 24, 2010, disclosure
net losses (including any prior year
limited, and you do not need to
requirements for groupings of trade or
unallowed losses) from business or
complete Form 8582. Enter losses
business activities or rental activities
rental passive activities. Overall loss is
reported on Schedule E (Form 1040),
apply. See Disclosure Requirement on
defined under Definitions on page 2.
Supplemental Income and Loss, Part I,
line 22, on Schedule E (Form 1040),
In figuring your overall gain or loss
Part l, line 23. For losses from a
from all passive activities for the year,
partnership or an S corporation, enter
do not include the following income or
the amount of the allowable loss from
Schedule K-1 in Schedule E (Form
Purpose of Form
1. Net income that is not passive
1040), Part II, column (f). Enter losses
activity income. See Passive Activity
Form 8582 is used by noncorporate
reported on line 32 of Form 4835, Farm
Income and Deductions beginning on
taxpayers to figure the amount of any
Rental Income and Expenses, on Form
passive activity loss (PAL) for the
4835, line 33c.
2. Net losses that are not passive
current tax year.
activity net losses. See Activities That
Coordination With Other
A PAL occurs when total losses
Are Not Passive Activities on page 2.
(including prior year unallowed losses)
3. Net income or net loss from your
from all your passive activities exceed
interest in any publicly traded
the total income from all your passive
Generally, PALs are subject to other
partnership (PTP). See Publicly Traded
limitations (for example, basis and
Partnerships (PTPs) beginning on
at-risk limitations) before they are
Generally, passive activities include:
subject to the passive loss limitations.
Trade or business activities in which
4. Any overall loss from an entire
Once a loss becomes allowable under
you did not materially participate for the
disposition of a passive activity. See
these other limitations, you must
Dispositions on page 7 for more
determine whether the loss is limited
Rental activities, regardless of your
under the passive loss rules. See Form
6198, At-Risk Limitations, for details on
PALs cannot be used to offset
the at-risk rules. Also, capital losses
income from nonpassive activities.
that are allowable under the passive
You actively participated in rental real
However, a special allowance for rental
loss rules may be limited under the
estate activities (see Special Allowance
real estate activities may allow some
capital loss limitations of section 1211.
for Rental Real Estate Activities
losses even if the losses exceed
Percentage depletion deductions that
beginning on page 3), and you meet all
are allowable under the passive loss
of the following conditions.
PALs not allowed in the current year
rules may be limited under section
Rental real estate activities with
are carried forward until they are
active participation were your only
allowed either against passive activity
income, against the special allowance,
Before Completing Form
You have no prior year unallowed
if applicable, or when you sell or
losses from these activities.
exchange your entire interest in the
Your total loss from the rental real
activity in a fully taxable transaction to
estate activities was not more than
To find out if your activity is treated as a
an unrelated party.
$25,000 ($12,500 if married filing
passive activity, read the following
For more information, see Pub. 925,
separately and you lived apart from
sections of these instructions.
Passive Activity and At-Risk Rules,
your spouse all year).
Trade or Business Activities if your
which contains a filled-in example of
If you are married filing separately,
activity is a trade or business activity
Form 8582 with step-by-step
you lived apart from your spouse all
instructions for reporting losses from
Rental Activities if your activity is the
You have no current or prior year
renting of tangible property (page 2).
Note. Corporations subject to the
unallowed credits from a passive
Material Participation (page 4).
passive activity rules must use Form
Grouping of Activities (page 5).
Cat. No. 64294A