Instructions For Form 8582 - Department Of The Treasury

Example. Use Worksheet 5 if

different parts of the same form or

Activity I

all the loss from an activity is reported

schedule (for example, 28%-rate and

A passive activity prior year

on Schedule E, even though part of

non-28%-rate capital losses reported

unallowed long-term capital loss (a

the loss is a current year Schedule E

in Part II of Schedule D). Enter the

28% rate loss) of $1,000 and a

loss and part of it is from a Schedule

name of the form or schedule and

current year long-term capital loss of

E prior year unallowed loss.

part on the line above line 1a of

$3,000.

Worksheet 6.

Column (a). For each activity

Activity II

entered in Worksheet 5, enter the net

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

A current year collectibles loss (a

loss plus the prior year unallowed

loss plus any prior year unallowed

28% rate loss) of $230 and net

loss for the activity. Figure this

loss from the activity that is reported

income of $1,100 from Schedule E

amount by adding the losses in

on the same form or, in the case of

(Form 1040).

columns (b) and (c) of Worksheets 1

Schedule D and Form 4797, the

and 2.

same part.

Worksheet 2

Column (b). For each activity

If you have a Schedule D 28% rate

Activity I has an overall loss of

entered in Worksheet 5, enter the

loss and a Schedule D non-28%-rate

$4,000 (current year long-term capital

amount from column (c) of Worksheet

loss, see the example on this page

loss of $3,000 and a prior year

4 for the activity. These are your

before completing Worksheet 6.

unallowed long-term capital loss of

unallowed losses for 2001. Keep a

$1,000). Activity II has an overall gain

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

record of these amounts so the

of $870 (current year net income of

income from the activity that is

losses can be used to figure your

$1,100 less a current year long-term

reported on the same form or

PAL next year.

capital loss of $230). Line 11 of Form

schedule as the loss on line 1a,

8582 shows an allowed loss of

Column (c). Subtract column (b)

column (a).

$1,100.

from column (a). These are your

Example. You enter a prior year

allowed losses for 2001. Report the

Worksheet 4

unallowed loss from Form 4797, Part

amounts in this column on the forms

I, on line 1a. If the activity has a

Activity I has an unallowed loss of

and schedules normally used.

current year Form 4797, Part I, gain,

$3,130 (line 3 of Form 8582 ($3,130)

See the forms and schedules listed

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

less line 9 of Form 8582 (-0-) x

under How To Report Allowed

If the activity does not have a Form

100%). All of the $230 loss is allowed

Losses on page 11. Also, see Pub.

4797, Part I, gain, enter zero on line

for Activity II.

925 for an extensive example of how

1b, column (a).

Worksheet 6

to report passive income and losses

Line 1c, column (b). Subtract line

Worksheet 6 is used to figure the

on the forms and schedules.

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

portion of the unallowed loss

(a), and enter the result in column (b).

Worksheet 6

attributable to the 28% rate loss and

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

Use Worksheet 6 for any activity

the portion attributable to the

line 1a, column (a), enter zero in

non-28%-rate loss.

listed in Worksheet 4 that has losses

column (b).

that are reported on two or more

The loss attributable to the 28%

Column (c). Divide each of the

different forms and schedules or

rate loss ($1,000) and the loss

losses entered in column (b) by the

different parts of the same form or

attributable to the non-28%-rate loss

total of column (b) and enter the ratio

schedule (for example, 28%-rate and

($3,000) are separate entries in

in this column. The total of this

non-28%-rate capital losses reported

Worksheet 6 (that is, losses entered

column must be 1.00.

in Part II of Schedule D). Worksheet 6

as if they were reported on different

Column (d). Multiply the unallowed

allocates the loss allowed and

forms or schedules). The ratio of

loss for this activity, found in

unallowed for the activity and

each loss to the total of the two

Worksheet 4, column (c), by each

allocates the allowed loss to the

losses is figured as follows. $1,000/

ratio in column (c) of Worksheet 6. If

different forms or schedules used to

$4,000 = .25. $3,000/$4,000 = .75.

zero is entered in column (b) of

report the losses.

Each of these ratios is multiplied by

Worksheet 6, also enter zero for that

Only losses that would cause a

the unallowed loss for Activity I,

form or schedule in column (d).

difference in tax liability if they were

shown in column (c) of Worksheet 4

The amount in column (d) is the

reported on a different form or

($3,130).

unallowed loss for 2001. Keep a

schedule or different parts of the

Unallowed losses for Activity I:

•

record of this worksheet so you can

same form or schedule are kept

28% rate loss: .25 x $3,130 =

use the losses to figure your PAL

separate. Those forms, schedules,

$782.50.

•

next year.

and parts are:

Non-28%-rate loss: .75 x $3,130 =

•

Schedules C, D (Parts I and II

Column (e). Subtract the amount in

$2,347.50.

(28% rate losses and non-28%-rate

column (d) from the loss entered on

Allowed losses for Activity I:

•

losses)), E, and F.

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

28% rate loss: $1,000 – $782.50 =

allowed loss for 2001 to enter on the

Note: You must make a separate

$217.50.

•

forms or schedules. The forms and

entry in Schedule D, Part I or Part II,

Non-28%-rate loss: $3,000 –

schedules you use must show the

for each transaction reported. See the

$2,347.50 = $652.50.

losses from this column and the

instructions for Schedule D (Form

The total loss allowed for Activity I

income, if any, for that activity from

1040).

($870) is entered in column (f), Part

•

column (a) of Worksheet 1 or 2.

Forms 4684 (Section B), 4797

II, Schedule D (Form 1040), and the

(Parts I and II), and 4835.

Example of Schedule D (Form

28% rate loss ($217.50) is entered in

Use a separate copy of Worksheet

1040) Transactions. The taxpayer

column (g). Keep a record of the

6 for each activity for which you have

had the following Schedule D (Form

unallowed 28%-rate and

losses reported on two or more

1040) transactions from two passive

non-28%-rate losses to figure the

different forms or schedules or

activities in 2001.

PAL for these transactions next year.

-10-

Instructions For Form 8582 - Department Of The Treasury - 2001 Page 10

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