Instructions For Form 8582 - Passive Activity Loss Limitations

How To Report

schedule) as the loss on line 1a, column

unallowed long-term capital loss of

(a).

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

Allowed Losses

$870 (current year net income of $1,100

Example. You enter a prior year

less a current year long-term capital

Line 4 is income. If line 4 of Form

unallowed loss from Form 4797, Part I,

loss of $230). Line 16 of Form 8582

8582 shows net income or zero, all the

on line 1a. If the activity has a current

shows an allowed loss of $1,100.

losses in columns (b) and (c) of

year Form 4797, Part I, gain, enter the

Worksheets 1 and 3 and all the

Since Activity II has an overall gain,

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

deductions in columns (a) and (b) of

the amounts shown in columns (a) and

doesn’t have a Form 4797, Part I, gain,

Worksheet 2 are allowed in full under

(b) of Worksheet 3 for that activity are

enter -0- on line 1b, column (a).

the passive loss rules. Report the

reported on the proper forms and

Column (b). Subtract line 1b, column

income and losses in columns (a), (b),

schedules and aren’t shown on any

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

and (c) of Worksheets 1 and 3 and

other worksheet.

the result in column (b). If line 1b,

deductions in columns (a) and (b) of

Worksheet 5

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

Worksheet 2 on the forms and

(a), enter -0- in column (b).

Activity I has an unallowed loss of

schedules normally used.

$3,130 (line 4 of Form 8582 ($3,130)

Column (c). Divide each of the losses

Line 16 is the same as the total of

less the sum of lines 10 and 14 of Form

entered in column (b) by the total of

lines 1b, 1c, 2a, 2b, 3b, and 3c. In

8582 (-0-) x 100%).

column (b) and enter the ratio in column

this case, all the losses in columns (b)

Worksheet 7

(c). The total of this column must be

and (c) of Worksheets 1 and 3 and all

1.00.

This worksheet is used to figure the

the deductions in columns (a) and (b) of

portion of the unallowed loss

Worksheet 2 are allowed in full under

Column (d). Multiply the unallowed

attributable to the 28% rate loss and the

the passive loss rules. Report the

loss for this activity, found in Worksheet

portion attributable to the non-28%-rate

income and losses in columns (a), (b),

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

loss.

and (c) of Worksheets 1 and 3 and

deductions in columns (a) and (b) of

The loss attributable to the 28% rate

column (b) of Worksheet 7, also enter

Worksheet 2 on the forms and

loss ($1,000) and the loss attributable to

-0- for that form or schedule in column

schedules normally used.

the non-28%-rate loss ($3,000) are

(d).

separate entries in Worksheet 7. The

Columns (a) and (c) of Worksheet 4

The amount in column (d) is the

ratio of each loss to the total of the two

are the same amount. In this case, all

unallowed loss for 2017. Keep a record

losses is figured as follows.

of this worksheet so you can use the

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

$1,000/$4,000 = 0.25 and

losses to figure your PAL next year.

Worksheet 1 and all the deductions in

$3,000/$4,000 = 0.75. Each of these

columns (a) and (b) of Worksheet 2 are

Column (e). Subtract the amount in

ratios is multiplied by the unallowed loss

allowed in full under the passive loss

column (d) from the loss entered on

for Activity I, shown in column (c) of

rules. Report the income and losses in

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

Worksheet 5 ($3,130).

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

loss allowed for 2017 under the passive

Unallowed losses for Activity I are the

and the deductions in columns (a) and

loss rules. Report the amounts in this

following.

(b) of Worksheet 2 on the forms and

column on the forms or schedules

28% rate loss: 0.25 x $3,130 =

schedules normally used.

normally used, subject to any further

$782.50.

Losses allowed in column (c) of

limitations described in

Coordination

Non-28%-rate loss: 0.75 x $3,130 =

Worksheet 6. The amounts in column

With Other

Limitations, earlier. The

$2,347.50.

forms and schedules you use must

Allowed losses for Activity I are the

show the losses from this column and

deductions allowed for 2017 for the

following.

the income, if any, for that activity from

activities listed in that worksheet. Report

28% rate loss: $1,000 − $782.50 =

column (a) of Worksheet 1 or

the loss allowed from column (c) of

$217.50.

Worksheet 3.

Worksheet 6 and the income, if any, for

Non-28%-rate loss: $3,000 −

that activity from column (a) of

Example of Form 8949

$2,347.50 = $652.50.

Worksheet 1 or 3, on the form or

transactions. The taxpayer had the

schedule normally used.

The total loss allowed for Activity I

following Form 8949 transactions from

($870) is entered in Part II of Form

Losses allowed in column (e) of

passive activities in 2017.

8949. The allowed 28% rate loss

Worksheet 7. The amounts in column

Activity I

($217.50) is entered on the 28% Rate

(e) of Worksheet 7 are the losses or

Gain Worksheet (see the instructions for

A passive activity prior year

deductions allowed for 2017 for the

Schedule D, line 18). Keep a record of

unallowed long-term capital loss (a 28%

activity listed on that worksheet. Report

the unallowed 28% rate and

rate loss) of $1,000 and a current year

the losses allowed from column (e) of

non-28%-rate losses to figure the PAL

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

Worksheet 7 and the income, if any, for

for next year.

loss) of $3,000.

that activity from column (a) of

See the forms and schedules listed

Activity II

Worksheet 1 or 3, on the forms or

under

How To Report Allowed Losses

schedules normally used.

A current year collectibles loss (a

next.

28% rate loss) of $230 and net income

Schedules C and F, and Form 4835.

of $1,100 from Schedule E (Form 1040).

Enter on the net profit or loss line of your

Schedule C or E, or line 34c of Form

Worksheet 3

4835, the allowed passive loss from the

Activity I has an overall loss of

worksheet. To the left of the entry

$4,000 (current year long-term capital

space, enter “PAL.”

loss of $3,000 and a prior year

-12-

Instructions for Form 8582 (2017)

Instructions For Form 8582 - Passive Activity Loss Limitations - 2017 Page 12

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