Instructions For Form 8582 - Passive Activity Loss Limitations

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and the allowed loss to report on your

If you entered amounts on both lines

the losses, if any, from column (e) of

forms and schedules for 2003.

10 and 14 of Form 8582, you must

Worksheet 3.

complete two separate Worksheets 4.

Column (b). Divide each of the

Worksheets 1, 2, and 3

For the second worksheet, you either

individual losses shown in column (a)

may attach an extra copy of page 2 of

Worksheets 1 and 3, columns (d) and

by the total of all the losses in column

Form 8582 or your own schedule in the

(e), show whether an activity had an

(a) and enter this ratio for each activity

same format as Worksheet 4. On the

overall gain or loss. Worksheet 2,

in column (b). The total of all the ratios

first Worksheet 4, list all activities with

column (c), shows the overall loss for

must equal 1.00.

an overall loss in column (e) of

CRDs from rental real estate activities.

Column (c). Complete the following

Worksheet 1. On the second

If you have activities that show overall

computation.

Worksheet 4, list all activities with an

gain in column (d) of Worksheet 1 or 3,

overall loss in column (c) of

report all the income and losses listed

Worksheet 2.

A. Enter as a positive amount

in columns (a), (b), and (c) for those

line 4 of Form 8582 . . . . . . .

activities on the proper forms and

Column (a). Enter the overall loss from

schedules.

column (e) of Worksheet 1 or column

B. Add lines 10 and 14 of

Form 8582 . . . . . . . . . . . . .

If you have activities that show an

overall loss in column (e) of Worksheet

Column (b). Divide each of the

C. Subtract line B from line A . .

1 or 3 or column (c) of Worksheet 2,

individual losses shown in column (a)

you must allocate your allowed loss on

by the total of all the losses in column

Multiply each ratio in column (b) by

line 16 of Form 8582 to those activities

(a) and enter this ratio for each activity

the amount on line C above, and enter

in column (b). The total of all the ratios

by completing Worksheets 4, 5, and 6

the result in column (c).

or 7.

in column (b) must equal 1.00.

Worksheets 6 and 7

Column (c). Multiply each ratio in

Complete Worksheet 4 only if you

column (b) by the amount on line 10 or

These worksheets allocate your

entered an amount (other than zero) on

line 14 of Form 8582, and enter the

unallowed and allowed losses for each

line 10 or 14 of Form 8582. Otherwise,

results in column (c). The total of

activity.

skip Worksheet 4 and complete

column (c) must be the same as line 10

Worksheet 5 for all activities in

If you have losses from any activity

or line 14 of Form 8582.

Worksheets 1 or 3 that have overall

that are reported on two or more

losses in column (e) and all activities in

Column (c) total is the same as

different forms or schedules, use

Worksheet 2.

column (a) total. If the total losses in

Worksheet 7 instead of Worksheet 6 for

column (c) are the same as those in

that activity.

Worksheet 4

column (a), the losses in Worksheets 1

Also use Worksheet 7 instead of

Use Worksheet 4 to allocate the special

and 2 are allowed in full and are not

Worksheet 6 for any activity with two or

carried over to Worksheet 5. Report all

allowance on line 10 or line 14 of Form

more transactions that are reported on

8582 among your rental real estate

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

the same form or schedule but must be

activities.

Worksheet 1 and columns (a) and (b) of

separately identified for tax purposes.

Worksheet 2 on the proper forms and

In the first column of Worksheet 4,

Transactions that must be separately

schedules.

enter the name of each activity. In the

identified include (a) capital losses that

Column (c) total is less than column

second column, enter the form or

are 28% rate losses and those that are

(a) total. If the total losses in column

schedule and line number on which the

not and (b) pre-May 6 and post-May 5

loss will be reported.

dispositions.

column (a), complete column (d).

Note: 28% rate gain or loss includes

Example. You receive a Schedule

Column (d). Subtract column (c) from

all collectibles gains and deductible

K-1 from partnership P that reports

column (a) and enter the results in

long-term losses and section 1202 gain

losses from two rental real estate

column (d). Also enter the amounts

on the sale of qualified small business

activities, Activity X and Activity Y. The

from column (d) of Worksheet 4 in

stock. See the instructions for Schedule

losses from partnership P are reported

column (a) of Worksheet 5.

D (Form 1040) for details, including the

on line 28A of Schedule E. In the first

definitions of “collectibles gains and

two columns of Worksheet 4, enter:

Worksheet 5

losses” and “section 1202 gain.”

Complete Worksheet 5 if any activities

Name of Activity

Form or Schedule

Worksheet 6

have an overall loss in column (e) of

Activity X

Sch E, line 28A

Worksheet 3 or losses in column (d) of

Use Worksheet 6 for any activity listed

Worksheet 4 (in column (e) of

in Worksheet 5 if all the loss from that

Activity Y

Sch E, line 28A

Worksheet 1 or column (c) of

activity is reported on one form or

Worksheet 2 if you did not have to

schedule and no transactions need to

If the loss from an activity is reported in

complete Worksheet 4).

be identified separately (as discussed

more than one place, identify both

above).

locations in the second column (for

On Worksheet 5, enter the name of

example, Sch E, line 28A/Form 4797,

each activity and the form or schedule

Example. Use Worksheet 6 if all the

line 2). If you need additional space,

loss from an activity is reported on

and line number on which the loss will

show this information on an attached

Schedule E, even though part of the

be reported. See the example for

statement.

loss is a current year Schedule E loss

Worksheet 4. Identify any deduction

and part of it is from a Schedule E prior

from Worksheet 2 on a separate line

Enter all activities with overall losses

year unallowed loss.

(even if the amount is from an activity

from Worksheets 1 and 2 as follows.

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also shown on Worksheet 1 or 3) and

If you entered an amount on line 10,

On Worksheet 6, enter the name of

add “CRD” after the name of the

list on Worksheet 4 all activities with an

each activity and the form or schedule

activity.

overall loss in column (e) of

and line number on which the loss is

Worksheet 1.

Column (a). Enter the amounts, if any,

reported. See the example for

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If you entered an amount on line 14,

from column (d) of Worksheet 4 (from

Worksheet 4. Identify each CRD from

list on Worksheet 4 all activities with an

column (e) of Worksheet 1 or column

Worksheet 5 on a separate line and

overall loss in column (c) of

add “CRD” after the name of the

Worksheet 2.

to complete Worksheet 4). Also enter

activity.

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Instructions For Form 8582 - Passive Activity Loss Limitations - 2003 Page 9

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