Instructions For Form 8582 - 2010 (Page 11 of 13) in pdf

Example. You enter a prior year

schedules and are not shown on any

(b), and (c) of Worksheets 1 and 3 and

unallowed loss from Form 4797, Part I,

other worksheet.

deductions in columns (a) and (b) of

on line 1a. If the activity has a current

Worksheet 2 on the forms and

Worksheet 5

year Form 4797, Part I, gain, enter the

schedules normally used.

Activity I has an unallowed loss of

gain on line 1b, column (a). If the

Columns (a) and (c) of Worksheet 4

$3,130 (line 4 of Form 8582 ($3,130)

activity does not have a Form 4797,

are the same amount. In this case, all

less the sum of lines 10 and 14 of Form

Part I, gain, enter -0- on line 1b, column

the losses in columns (b) and (c) of

8582 (-0-) x 100%).

(a).

Worksheet 1 and all the deductions in

Worksheet 7

columns (a) and (b) of Worksheet 2 are

Line 1c, column (b). Subtract line 1b,

This worksheet is used to figure the

allowed in full. Report the income and

column (a), from line 1a, column (a),

portion of the unallowed loss

losses in columns (a), (b), and (c) of

and enter the result in column (b). If line

attributable to the 28% rate loss and

Worksheet 1 and the deductions in

1b, column (a), is more than line 1a,

the portion attributable to the

columns (a) and (b) of Worksheet 2 on

column (a), enter -0- in column (b).

non-28%-rate loss.

the forms and schedules normally used.

Column (c). Divide each of the losses

The loss attributable to the 28% rate

Losses allowed in column (c) of

entered in column (b) by the total of

loss ($1,000) and the loss attributable

Worksheet 6. The amounts in column

column (b) and enter the ratio in

to the non-28%-rate loss ($3,000) are

column (c). The total of this column

separate entries in Worksheet 7. The

deductions allowed for 2010 for the

must be 1.00.

ratio of each loss to the total of the two

activities listed in that worksheet.

Column (d). Multiply the unallowed

losses is figured as follows. $1,000/

Report the loss allowed from column (c)

loss for this activity, found in Worksheet

$4,000 = .25. $3,000/$4,000 = .75.

of Worksheet 6 and the income, if any,

5, column (c), by each ratio in column

Each of these ratios is multiplied by the

for that activity from column (a) of

unallowed loss for Activity I, shown in

Worksheet 1 or 3, on the form or

column (b) of Worksheet 7, also enter

column (c) of Worksheet 5 ($3,130).

schedule normally used.

-0- for that form or schedule in column

Unallowed losses for Activity I:

Losses allowed in column (e) of

(d).

•

28% rate loss: .25 x $3,130 =

Worksheet 7. The amounts in column

The amount in column (d) is the

$782.50.

(e) of Worksheet 7 are the losses or

•

unallowed loss for 2010. Keep a record

Non-28%-rate loss: .75 x $3,130 =

deductions allowed for 2010 for the

of this worksheet so you can use the

$2,347.50.

activity listed on that worksheet. Report

losses to figure your PAL next year.

the losses allowed from column (e) of

Allowed losses for Activity I:

•

Worksheet 7 and the income, if any, for

Column (e). Subtract the amount in

28% rate loss: $1,000 − $782.50 =

that activity from column (a) of

column (d) from the loss entered on line

$217.50.

•

Worksheet 1 or 3, on the forms or

1a, column (a). This is the allowed loss

Non-28%-rate loss: $3,000 −

schedules normally used.

for 2010 to enter on the forms or

$2,347.50 = $652.50.

schedules. The forms and schedules

Schedules C and F, and Form 4835.

The total loss allowed for Activity I

you use must show the losses from this

Enter on the net profit or loss line of

($870) is entered in Part II of Schedule

column and the income, if any, for that

your schedule or form the allowed

D (Form 1040). The 28% rate loss

activity from column (a) of Worksheet 1

passive loss from the worksheet. To the

($217.50) is entered on the 28% Rate

or Worksheet 3.

left of the entry space, enter “PAL.”

Gain Worksheet (see Schedule D

Example of Schedule D (Form

instructions for line 18). Keep a record

If the net profit or loss line on your

1040) transactions. The taxpayer had

of the unallowed 28% rate and

form or schedule shows net profit for

the following Schedule D (Form 1040)

non-28%-rate losses to figure the PAL

the year, reduce the net profit by the

transactions from passive activities in

for these transactions next year.

allowed loss from Worksheet 6 or 7,

2010.

and enter the result on the net profit or

See the forms and schedules listed

loss line.

under How To Report Allowed Losses

Activity I

below. Also, see Pub. 925 for an

Example. Schedule C shows net

A passive activity prior year

extensive example of how to report

profit for the year of $5,000 from a

unallowed long-term capital loss (a 28%

passive income and losses on the

passive activity. The activity also has a

rate loss) of $1,000 and a current year

forms and schedules.

Form 4797 gain of $2,500 and a prior

long-term capital loss (a non-28%-rate

year unallowed Schedule C loss of

loss) of $3,000.

How To Report

$6,000. The loss allowed for 2010 is

Activity II

$6,000. You enter a net loss of $1,000

Allowed Losses

on line 31 of Schedule C (the $5,000

A current year collectibles loss (a

net profit for the year less the $6,000

Line 4 is income. If line 4 of Form

28% rate loss) of $230 and net income

loss allowed for the year). To the left of

8582 shows net income or zero, all the

of $1,100 from Schedule E (Form

the entry space, you enter “PAL.”

losses in columns (b) and (c) of

1040).

See Schedule D and Form 4797

Worksheets 1 and 3 and all the

Worksheet 3

deductions in columns (a) and (b) of

instructions on page 12 if you also had

Activity I has an overall loss of

passive gains and losses from the sale

Worksheet 2 are allowed in full. Report

$4,000 (current year long-term capital

the income and losses in columns (a),

of assets or of an interest in a passive

loss of $3,000 and a prior year

(b), and (c) of Worksheets 1 and 3 and

activity.

unallowed long-term capital loss of

deductions in columns (a) and (b) of

Schedule E, Part I. Enter the allowed

$1,000). Activity II has an overall gain

Worksheet 2 on the forms and

loss from the worksheet on line 23 of

of $870 (current year net income of

schedules normally used.

Schedule E. An activity that has net

$1,100 less a current year long-term

Line 16 is the same as the total of

profit for the year and prior year

capital loss of $230). Line 16 of Form

lines 1b, 1c, 2a, 2b, 3b, and 3c. In

unallowed losses will have net profit on

8582 shows an allowed loss of $1,100.

this case, all the losses in columns (b)

line 22 and the allowed loss on line 23.

Since Activity II has an overall gain,

and (c) of Worksheets 1 and 3 and all

The allowed loss on line 23 will include

the amounts shown in columns (a) and

the deductions in columns (a) and (b) of

the loss allowed to the extent of the net

(b) of Worksheet 3 for that activity are

Worksheet 2 are allowed in full. Report

profit. Line 24 of Schedule E will show

reported on the proper forms and

the income and losses in columns (a),

total profit and line 25 will show total

-11-

Instructions for Form 8582 (2010)

Instructions For Form 8582 - 2010 Page 11

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