Instructions For Form 8582 - Passive Activity Loss Limitations

Column (a). For each activity entered

Line 1a, column (a). Enter the net loss

Activity II

in Worksheet 6, enter the net loss plus

plus any prior year unallowed loss from

A current year collectibles loss (a

the prior year unallowed loss for the

the activity that is reported on the same

28% rate loss) of $100 and net income

activity. Figure this amount by adding

form or, in the case of Schedule D and

of $600 from Schedule E (Form 1040).

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

Form 4797, the same part and either

Activity III

Worksheets 1 and 3 or enter the loss

pre-May 6 or post-May 5.

A current year (post-May 5)

from column (c) of Worksheet 2.

If you have a Schedule D 28% rate

long-term capital loss of $2,500 and a

Column (b). For each activity entered

loss and a Schedule D non-28%-rate

current year (pre-May 6) long-term

in Worksheet 6, enter the amount from

loss, or losses from both pre-May 6 and

capital loss of $500.

column (c) of Worksheet 5 for the

post-May 5 dispositions, see Example

Worksheet 3

activity. These are your unallowed

of Schedule D (Form 1040)

losses for 2003. Keep a record of

Activity I has an overall loss of

Transactions beginning on this page

these amounts so the losses can be

$2,000 (current year long-term capital

before completing Worksheet 7.

used to figure your PAL next year.

loss of $1,500 and a prior year

Line 1b, column (a). Enter any net

unallowed long-term capital loss of

Column (c). Subtract column (b) from

income from the activity that is reported

$500). Activity II has an overall gain of

column (a). These are your allowed

on the same form or schedule (or on

$500 (current year net income of $600

losses for 2003. Report the amounts in

the same part of the same form or

less a current year long-term capital

this column on the forms and schedules

schedule) as the loss on line 1a,

loss of $100). Activity III has an overall

normally used.

column (a).

loss of $3,000 (current year long-term

See the forms and schedules listed

Example. You enter a prior year

capital loss of $2,500 plus a current

under How To Report Allowed

unallowed loss from Form 4797, Part I,

year long-term capital loss of $500).

Losses on page 11. Also, see Pub.

on line 1a. If the activity has a current

Line 16 of Form 8582 shows an

925 for an extensive example of how to

year Form 4797, Part I, gain, enter the

allowed loss of $600.

report passive income and losses on

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

Since Activity II has an overall gain,

the forms and schedules.

activity does not have a Form 4797,

the amounts shown in columns (a) and

Part I, gain, enter zero (-0-) on line 1b,

Worksheet 7

(b) of Worksheet 3 for that activity are

column (a).

Use Worksheet 7 for any activity listed

reported on the proper forms and

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

in Worksheet 5 that has losses that are

schedules and are not shown on any

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

reported on two or more different forms

other worksheet.

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

and schedules or on different parts of

Worksheet 5

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

the same form or schedule (for

Activity I has an unallowed loss of

column (a), enter zero (-0-) in column

example, pre-May 6 and post-May 5

$1,800 (line 4 of Form 8582 ($4,500)

(b).

capital losses reported in Part I or Part

less the sum of lines 10 and 14 of Form

II of Schedule D). Worksheet 7

Column (c). Divide each of the losses

8582 (-0-) x 40%). Activity III has an

allocates the allowed and unallowed

entered in column (b) by the total of

unallowed loss of $2,700 (line 4 of

loss for the activity and allocates the

column (b) and enter the ratio in

Form 8582 ($4,500) less the sum of

allowed loss to the different forms or

column (c). The total of this column

lines 10 and 14 of Form 8582 (-0-) ×

schedules (or different parts of the

must be 1.00.

60%.

same form or schedule) used to report

Column (d). Multiply the unallowed

Worksheet 7

the losses.

loss for this activity, found in Worksheet

This worksheet is used to figure the

Only losses that would cause a

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

portion of the unallowed loss

difference in tax liability if they were

attributable to the 28% rate loss, the

reported on a different form or schedule

entered in column (b) of Worksheet 7,

non-28%-rate loss, the pre-May 6 loss,

or on different parts of the same form or

also enter zero (-0-) for that form or

and the post-May 5 loss. Separate

schedule are kept separate. Those

schedule in column (d).

worksheets must be used to report the

forms, schedules, and parts are:

The amount in column (d) is the

•

amounts for Activity I and Activity III.

Schedules C, E, and F.

unallowed loss for 2003. Keep a

•

Schedule D (Parts I and II (28% rate

For Activity I, the loss attributable to

record of this worksheet so you can use

losses and non-28%-rate losses and

the 28% rate loss ($500) and the loss

the losses to figure your PAL next year.

pre-May 6 and post-May 5 losses)).

attributable to the non-28%-rate loss

Column (e). Subtract the amount in

($1,500) are separate entries on

Note: You must make a separate entry

column (d) from the loss entered on line

Worksheet 7 for that activity. The ratio

in Schedule D, Part I or Part II, for each

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

of each loss to the total of the two

transaction reported. See the

loss for 2003 to enter on the forms or

losses is figured as follows. $500/

Instructions for Schedule D (Form

schedules. The forms and schedules

$2,000 = .25. $1,500/$2,000 = .75.

1040).

you use must show the losses from this

•

Each of these ratios is multiplied by the

Forms 4684 (Section B), 4797

column and the income, if any, for that

unallowed loss for Activity I, shown in

(Parts I and II), and 4835.

activity from column (a) of Worksheet 1

column (c) of Worksheet 5 ($1,800).

Use a separate copy of Worksheet 7

or Worksheet 3.

Unallowed losses for Activity I:

for each activity for which you have

•

Example of Schedule D (Form

28% rate loss: .25 x $1,800 = $450.

losses reported on two or more different

•

1040) Transactions. The taxpayer had

Non-28%-rate loss: .75 x $1,800 =

forms or schedules or different parts of

the following Schedule D (Form 1040)

$1,350.

the same form or schedule (for

transactions from three passive

example, pre-May 6 and post-May 5

Allowed losses for Activity I:

activities in 2003.

•

28% rate loss: $500 − $450 = $50.

capital losses reported in Part I or Part

•

Non-28%-rate loss: $1,500 − $1,350

Activity I

II of Schedule D).

= $150.

On Worksheet 7, enter the form or

A passive activity prior year

schedule and line number on the dotted

unallowed long-term capital loss (a 28%

The total loss allowed for Activity I

line above each line 1a (for example,

rate loss) of $500 and a current year

($200) is entered in column (f), Part II,

Schedule D, line 12(g) to report

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

Schedule D (Form 1040). The 28% rate

post-May 5 long-term loss from a

loss from a pre-May 6 disposition) of

loss ($50) is entered on the 28% Rate

partnership).

$1,500.

Gain Worksheet (see Schedule D

-10-

Instructions For Form 8582 - Passive Activity Loss Limitations - 2003 Page 10

Related Articles

Related forms

Related Categories