Instructions For Form 8582 - 2010 (Page 6 of 13) in pdf

from all passive activities or any

Passive activity income includes all

recovery of all or part of a prior year

passive activity.

income from passive activities,

loss deduction if the deduction for the

including (with certain exceptions

loss was not treated as a passive

If your passive activity is reported on

described in Temporary Regulations

activity deduction.

Schedule C, C-EZ, E, or F, and the

•

section 1.469-2T(c)(2) and Regulations

Cancellation of debt income to the

activity has no prior year unallowed

section 1.469-2(c)(2)) gain from the

extent that at the time the debt was

losses or any gain or loss from the

disposition of an interest in a passive

discharged, the debt was not properly

disposition of assets or an interest in

activity or of property used in a passive

allocable under Temporary Regulations

the activity, take into account only the

activity at the time of the disposition.

section 1.163-8T to passive activities.

passive activity income and passive

activity deductions from the activity to

Recharacterization of

Passive activity income does not

figure the amount to enter on Form

include the following.

Passive Income

8582 and the worksheets.

•

Income from an activity that is not a

Certain income from passive activities

passive activity.

If you own an interest in a passive

•

must be recharacterized and excluded

Portfolio income, including interest

activity through a partnership or an

from passive activity income. The

(other than self-charged interest treated

S corporation, the partnership or

amount of income recharacterized

as passive activity income), dividends,

S corporation will generally provide you

equals the net income from the sources

annuities, and royalties not derived in

with the net income or net loss from the

given below. If during the tax year you

the ordinary course of a trade or

passive activity. If, however, the

received net income from any of these

business, and gain or loss from the

partnership or S corporation must state

sources (either directly or through a

disposition of property that produces

an item of gross income or deduction

partnership or an S corporation), see

portfolio income or is held for

separately to you, and the gross

Pub. 925 to find out how to report net

investment (see section 163(d)(5)). See

income or deduction is passive activity

income or loss from these sources. For

Temporary Regulations section

gross income or a passive activity

more information, see Temporary

1.469-2T(c)(3).

deduction (respectively), include that

Regulations section 1.469-2T(f) and

•

Alaska Permanent Fund dividends.

amount in the net income or net loss

Regulations section 1.469-2(f).

•

Personal service income, including

entered on Form 8582 and the

salaries, wages, commissions,

Income from the following sources

worksheets.

self-employment income from trade or

may be subject to the net income

The partnership or S corporation

business activities in which you

recharacterization rules.

•

does not have a record of any

materially participated for the tax year,

Significant participation passive

prior year unallowed losses from

deferred compensation, taxable social

activities defined on page 4.

CAUTION

•

the passive activities of the partnership

security and other retirement benefits,

Rental of property if less than 30% of

or S corporation. If you had prior year

and payments from partnerships to

the unadjusted basis of the property is

unallowed losses from these activities,

partners for personal services. See

subject to depreciation.

•

they can be found in column (c) of your

Temporary Regulations section

Passive equity-financed lending

2009 Worksheet 5.

1.469-2T(c)(4).

activities.

•

Income from positive section 481

Rental of property incidental to a

Self-Charged Interest

development activity.

adjustments allocated to activities other

•

Certain self-charged interest income or

than passive activities. See Temporary

Rental of property to a nonpassive

deductions may be treated as passive

activity.

Regulations section 1.469-2T(c)(5).

•

activity gross income or passive activity

Acquisition of an interest in a

Income or gain from investments of

deductions if the loan proceeds are

pass-through entity that licenses

working capital.

•

used in a passive activity. Generally,

intangible property.

Income from an oil or gas property if

self-charged interest income and

you treated any loss from a working

Passive Activity Deductions

deductions result from loans between

interest in the property for any tax year

you and a partnership or S corporation

beginning after 1986 as a nonpassive

To figure your overall gain or overall

in which you had a direct or indirect

loss under the rule excluding working

loss from all passive activities or any

ownership interest. This includes both

interests in oil and gas wells from

passive activity, take into account only

loans you made to the partnership or

passive activities (see item 3 under

passive activity deductions.

S corporation and loans the partnership

Activities That Are Not Passive

Passive activity deductions include

or S corporation made to you. It also

Activities on page 2). See Regulations

all deductions from activities that are

includes loans from one partnership or

section 1.469-2(c)(6).

passive activities for the current tax

•

S corporation to another partnership or

Any income from intangible property

year and all deductions from passive

S corporation if each owner in the

if your personal efforts significantly

activities that were disallowed under the

borrowing entity has the same

contributed to the creation of the

PAL rules in prior tax years and carried

proportional ownership interest in the

property.

forward to the current tax year. See

•

lending entity. The self-charged interest

Any income treated as not from a

Regulations section 1.469-1(f)(4).

rules do not apply to your interest in a

passive activity under Temporary

Passive activity deductions include

partnership or S corporation if the entity

Regulations section 1.469-2T(f) and

losses from a disposition of property

made an election under Regulations

Regulations section 1.469-2(f). See

used in a passive activity at the time of

section 1.469-7(g) to avoid the

Recharacterization of Passive Income

the disposition and losses from a

application of these rules. For more

on this page.

•

disposition of less than your entire

details on the self-charged interest

Overall gain from any interest in a

interest in a passive activity. See

rules, see Regulations section 1.469-7.

PTP (see item 2 under Special

Dispositions on page 7 for the

Instructions for PTPs beginning on

Passive Activity Income

treatment of losses upon disposition of

page 12).

your entire interest in an activity.

•

State, local, and foreign income tax

To figure your overall gain or loss from

all passive activities or any passive

refunds.

Passive activity deductions do not

•

Income from a covenant not to

activity, take into account only passive

include the following.

•

activity income. Do not enter income

compete.

Deductions for expenses (other than

•

that is not passive activity income on

Any reimbursement of a casualty or

interest expense) that are clearly and

Form 8582 or the worksheets.

theft loss included in income as

directly allocable to portfolio income.

-6-

Instructions for Form 8582 (2010)

Instructions For Form 8582 - 2010 Page 6

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