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Worksheet 6

Use Worksheet 6 to allocate the allowed and unallowed credits for each activity.

Column (a). Enter the total credits from column (c) of Worksheet 5.

Column (b). Divide each of the credits in column (a) by the total of all credits in column (a). The total of the ratios should equal

1.00.

Column (c). Multiply line 8 of Form 8810 by the ratios in column (b) and enter the results in column (c). These are the

unallowed credits for 2002. Keep a record of these amounts, so the credits can be carried to the next year.

Column (d). Subtract column (c) from column (a). These are the allowed credits for 2002. The amounts in this column should

be reported on the forms normally used. See Reporting Allowed Credits on Tax Return below.

Worksheet 6—Allowed and Unallowed Credits

Form To Be

Name of activity

(a) Credits

(b) Ratio

(d) Allowed Credits

Reported on

Totals

1.00

Reporting Allowed Credits on

Do not enter credits from PTPs on

corporation’s interest in a passive activity

Form 8810 or the worksheets. Instead,

or if the disposition is not fully taxable.

Tax Return

use the following steps to figure the

The amount of any unallowed credit,

Form 3800. Enter on line 5 of Form 3800

allowed and unallowed credits from

however, remains available to offset the

the total passive activity general business

passive activities held through PTPs.

tax attributable to net passive and net

credit allowed from column (d) of

active income.

1. Figure the tax attributable to net

Worksheet 6.

passive income for each PTP with current

Form 5735. Enter on line 17 or line 27 of

year passive activity credits or prior year

Paperwork Reduction Act Notice. We

Form 5735 any allowed possessions

unallowed credits.

ask for the information on this form to

corporation tax credit. To the left of the

2. Use the smaller of the tax

carry out the Internal Revenue laws of the

entry, write “PAC.”

attributable to net income from passive

United States. You are required to give us

Form 8586. If the corporation is not

activities of the PTP or the credit

the information. We need it to ensure that

required to file Form 3800, enter on line 7

(including prior year unallowed credits)

you are complying with these laws and to

of Form 8586 any allowed low-income

from passive activities of the PTP as the

allow us to figure and collect the right

housing credit.

amount allowed. Report the allowed

amount of tax.

credits on the form normally used and

Form 8834. Enter on line 13 of Form

You are not required to provide the

keep a record of the unallowed credits to

8834 the passive activity qualified electric

information requested on a form that is

be carried to the next year.

vehicle credit allowed from column (d) of

subject to the Paperwork Reduction Act

Worksheet 6.

unless the form displays a valid OMB

Part III—Election To

Form 8844. Enter on line 7 of Form 8844

control number. Books or records relating

the passive activity empowerment zone

to a form or its instructions must be

Increase Basis of Credit

and renewal community employment

retained as long as their contents may

credit allowed from column (d) of

Property

become material in the administration of

Worksheet 6.

any Internal Revenue law. Generally, tax

Line 10. Check the box on this line if the

returns and return information are

Form 8884. Enter on line 7 of Form 8884

corporation elects to increase the basis of

confidential, as required by section 6103.

the passive activity New York Liberty

credit property it used in a passive activity

Zone business employee credit allowed

The time needed to complete and file

or former passive activity by the

from column (d) of Worksheet 6.

this form will vary depending on individual

unallowed credit that reduced the

circumstances. The estimated average

Nonconventional source fuel credit. If

property’s basis.

the corporation has an allowed passive

time is:

The election is available for a fully

activity credit for fuel produced from a

taxable disposition of an entire interest in

Recordkeeping . . . . . . . . .

26 hr., 18 min.

nonconventional source, see section 29

an activity for which a basis adjustment

for limitations and adjustments to the

Learning about the law or

was made as a result of placing in service

credit. Attach a separate schedule to the

the form . . . . . . . . . . . . . .

5 hr., 15 min.

property for which a credit was taken. The

tax return showing how the credit was

corporation may elect to increase the

Preparing and sending the

figured. Combine any nonpassive credits

basis of the credit property immediately

form to the IRS . . . . . . . . . .

5 hr., 55 min.

for fuel from a nonconventional source

before the disposition (by an amount no

with the passive activity credit before

If you have comments concerning the

greater than the amount of the original

applying the limitations and adjustments.

accuracy of these time estimates or

basis reduction) to the extent that the

Report the credit on the line specified by

suggestions for making this form simpler,

credit has not previously been allowed

the instructions for the tax return being

we would be happy to hear from you. See

because of the passive credit limitations.

filed.

the instructions for the tax return with

The amount of the unallowed credit that

Credits From PTPs

which this form is filed.

may then be applied against tax is

reduced by the amount of the basis

A credit from a passive activity held

adjustment.

through a PTP is allowed to the extent of

the tax attributable to net passive income

No basis adjustment may be elected

from that PTP. See page 10 for the

on a partial disposition of the

definition of a PTP.

-12-

Instructions For Form 8810 - Corporate Passive Activity Loss And Credit Limitations - 2002 Page 12

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