Instructions For Form 8582-Cr - Passive Activity Credit Limitations

with passive activity credits (including

than Step 3, allocate the amount in

Publicly Traded

prior year unallowed credits).

Step 4 pro rata to the credits from

Partnerships (PTPs)

each PTP in Step 3.

Step 1. Figure the tax attributable to

net passive income from each PTP

A PTP is a partnership whose

Complete Steps 6 through 8 only if

with passive activity credits (including

interests are traded on an established

you have low-income housing credits

prior year unallowed credits) by

securities market or are readily

(including prior year unallowed

following the steps shown in the

tradable on a secondary market (or

credits) for property placed in service

worksheet in the line 6 instructions on

its substantial equivalent).

after 1989 from a PTP in which you

page 10. Complete a separate tax

acquired your interest after 1989.

An established securities market

computation for each PTP with net

includes any national securities

Step 6. Reduce low-income housing

passive income.

exchange and any local exchange

credits (including prior year unallowed

Step 2. Passive activity credits from

registered under the Securities

credits) for property placed in service

each PTP are allowed to the extent of

Exchange Act of 1934 or exempted

after 1989 from each PTP in which

the tax attributable to net passive

from registration because of the

you also acquired your interest after

income from the same PTP. Credits

limited volume of transactions. It also

1989 to the extent of the tax

in excess of the tax attributable to net

includes any over-the-counter market.

attributable to net passive income

passive income may be allowed

from that PTP, which was figured in

A secondary market generally

under one or more steps below.

Step 1.

exists if a person stands ready to

Complete Steps 3 through 5 only if

make a market in the interest. An

Step 7. Before beginning this step,

your passive activity credits (including

interest is treated as readily tradable

complete Form 8582-CR if you have

prior year unallowed credits) include

if the interest is regularly quoted by

any passive credits that are not from

rehabilitation credits from rental real

persons, such as brokers or dealers,

PTPs. Subtract the sum of the credits

estate activities from PTPs,

who are making a market in the

allowed in Step 5 above and Form

interest.

low-income housing credits for

8582-CR, line 36, from the amount on

property placed in service before

Form 8582-CR, line 35, to figure the

The substantial equivalent of a

1990 from PTPs, or low-income

tax attributable to the special

secondary market exists if there is no

housing credits from PTPs in which

allowance available for the credits in

identifiable market maker, but holders

you acquired your interest before

Step 6.

of interests have a readily available,

1990 (regardless of the date placed in

regular, and ongoing opportunity to

If your only passive credits are

service).

sell or exchange their interests

from PTPs, complete the steps

through a public means of obtaining

Step 3. Reduce rehabilitation credits

shown in the worksheet in the line 35

or providing information on offers to

from rental real estate activities from

instructions on page 13. Subtract the

each PTP, low-income housing

buy, sell, or exchange interests.

credits allowed in Step 5 above from

credits for property placed in service

Similarly, the substantial equivalent of

the tax figured on line K of that

before 1990 from each PTP, and any

a secondary market exists if

worksheet. The result is the tax

low income housing credits (including

prospective buyers and sellers have

attributable to the special allowance

prior year unallowed credits) from

the opportunity to buy, sell, or

available for the credits in Step 6.

exchange interests in a timeframe

each PTP in which you acquired your

Step 8. Low-income housing credits

and with the regularity and continuity

interest before 1990 (regardless of

allowed under the special allowance

that the existence of a market maker

the date placed in service) to the

for property placed in service after

would provide.

extent of the tax, which was figured in

1989 from a PTP in which you also

Step 1, attributable to net passive

Credits From PTPs

acquired your interest after 1989 are

income from that PTP.

the smaller of the total credits from

A credit from a passive activity held

Step 4. Before beginning this step,

Step 6 or the amount figured in Step

through a PTP is allowed to the

complete Form 8582-CR if you have

7. If Step 7 is smaller than Step 6,

extent of the tax attributable to net

any passive credits that are not from

allocate the amount in Step 7 pro rata

passive income from that partnership.

PTPs. Subtract the total of lines 16,

to the credits from each PTP in Step

In addition, rehabilitation credits and

30, and 36, if any, of Form 8582-CR,

low-income housing credits from

from the amount on line 27 of Form

rental real estate activities held

Step 9. Add the credits from Steps

8582-CR, to figure the tax attributable

through PTPs are allowed to the

2, 5, and 8. These are the total

to the special allowance available for

extent of any special allowance that

credits allowed from passive activities

the credits in Step 3.

remains after taking into account

of PTPs.

If your only passive credits are

losses and credits from rental real

Step 10. Figure the allowed and

from PTPs, complete lines 21 through

estate activities not owned through

unallowed credits from each PTP.

27 of Form 8582-CR as a worksheet.

PTPs. See Special Allowance for

Report the allowed credits on the

The amount on line 27 is the tax

Rental Real Estate Activities

forms normally used. Keep a record

attributable to the special allowance

beginning on page 2.

of the unallowed credits to be carried

available for the credits in Step 3.

forward to 2009.

Do not enter credits from

Step 5. Rehabilitation credits from

PTPs on the worksheets or on

rental real estate activities of PTPs,

Form 8582-CR. Instead, use

CAUTION

low-income housing credits for

Part VI—Election To

the following steps to figure the

property placed in service before

allowed and unallowed credits from

Increase Basis of Credit

1990 by PTPs, and low-income

passive activities held through PTPs.

housing credits from PTPs in which

Property

you acquired your interest before

Computation of Allowed

1990 (regardless of the date placed in

Complete Part VI if you disposed of

Passive Activity Credits

service) allowed under the special

your entire interest in a passive

From PTPs

allowance are the smaller of the total

activity and elect to increase the

Complete Steps 1 and 2 only if you

credits from Step 3 or the amount

basis of the credit property used in

have net passive income from a PTP

figured in Step 4. If Step 4 is smaller

the activity by the unallowed credit

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Instructions For Form 8582-Cr - Passive Activity Credit Limitations - 2008 Page 14

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