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Worksheet 5—For Form 8810, Lines 5a and 5b

(b) Prior Year

(a) Current Year

Name of activity

From Form

Unallowed Credits

(add columns (a)

Credits (line 5a)

(line 5b)

and (b))

Totals. Enter on lines 5a and 5b of Form 8810

•

The corporation is a closely held

Computation for Line 7

P. Tax attributable to net active income. Subtract

line O from line N . . . . . . . . . . . . . . . . .

corporation with a loss or zero on line 1d

Q. Tax attributable to net passive income and

Part I — Tax Attributable to Net Passive

of Form 8810 and that amount is equal to

net active income. Add lines F and P. Enter the

Income

result here and on line 7 of Form 8810 . . . . . .

or greater than the net active income on

line 2 of Form 8810.

A. Income tax before credits from Form 1120

•

Line C. Enter the net income, if any, from

The corporation is a closely held

(Schedule J, line 3) . . . . . . . . . . . . . . . .

line 1d of Form 8810. If the corporation

B. Taxable income from Form 1120 . . . .

corporation with net income on line 3 of

C. Net passive income. See instructions

has an overall loss from the entire

Form 8810, and the corporation has an

for line C below . . . . . . . . . . . . . .

disposition of a passive activity, the

overall loss from an entire disposition that

D. Subtract line C from line B. If zero or

amount to enter on line C is the net

less, enter -0- here and on line E below

is equal to or greater than the net income

E. Tax attributable to line D. Figure the tax on the

income from line 1d reduced by the

on line 3.

line D amount as if it were the corporation’s only

overall loss, but not below zero. If the

Part I of the Computation for Line 7

taxable income . . . . . . . . . . . . . . . . . . .

result is zero, skip the rest of the Part I

F. Tax attributable to net passive income.

below is used by personal service

Subtract line E from line A. Closely held

computation.

corporations and closely held

corporations that do not have net active income

Line J. If the corporation has net passive

corporations with net passive income.

and personal service corporations enter the

amount here and on line 7 of Form 8810 . . . .

income, enter the amount from line C on

Part II is used by closely held

this line. If the corporation has a net loss

Part II — Tax Attributable to Net Active

corporations that have net active income.

from line 1d of Form 8810, enter that

Income

See the line 2 instructions on page 8 for

amount on line J as a negative amount.

the definition of net active income. If the

G. Enter amount from line E if Part I is completed.

Line 9. If the corporation has one type of

corporation has both net passive income

Otherwise, enter income tax before credits from

credit, the amount on line 9 is the credit

Form 1120 (Schedule J, line 3) . . . . . . . . . .

and net active income, complete Part I

H. Taxable income from Form 1120 . . . .

allowed for the year. See Reporting

and Part II and enter the amount from line

I. Net active income . . . . . . . . . . . .

Allowed Credits on Tax Return on page

Q on line 7 of Form 8810.

J. Net passive income or loss. See

12.

instructions for line J below . . . . . . .

Note: When using taxable income in the

K. Add lines I and J. If less than -0-, enter

Use Worksheet 6 on page 12 to figure

computation for line 7, it is not necessary

as a negative amount . . . . . . . . . .

how much of the credit on line 9 is

L. Subtract line K from line H. If zero or

to refigure items based on taxable

less, enter -0- here and on line M below

allowed for each activity. Keep a record of

income, such as the contributions

M. Tax attributable to line L. Figure the tax on the

the unallowed credit and the activity to

deduction, dividends-received deduction,

line L amount as if it were the corporation’s only

which it belongs to figure the credit

taxable income . . . . . . . . . . . . . . . . . . .

and the net operating loss deduction.

N. Subtract line M from line G. If zero or less, enter

allowed next year.

Use the applicable tax rates in section

-0- here and on line P . . . . . . . . . . . . . . .

O. Enter the corporation’s nonpassive credits

11 when figuring the tax attributable

without regard to the tax liability limitations . . .

amounts. Also, see how to figure tax in

the instructions for the tax return filed.

-11-

Instructions For Form 8810 - Corporate Passive Activity Loss And Credit Limitations - 2002 Page 11

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