Instructions For Form 8582 - Passive Activity Loss Limitations

in column (j). In column (g), you report

each activity in column (a). Complete

these laws and to allow us to figure and

the remaining Schedule E gain of

column (b) of Worksheet 5 according to

collect the right amount of tax.

$3,500 ($8,000 − $4,500) as passive

its instructions. Multiply the total

You are not required to provide the

income. On the appropriate line of Form

unallowed loss from the PTP by each

information requested on a form that is

4797, you report the prior year

ratio in column (b) and enter the result in

subject to the Paperwork Reduction Act

unallowed loss of $3,500. You enter

column (c) of Worksheet 5.

unless the form displays a valid OMB

“From PTP” to the left of each entry

Next, complete Worksheet 6 for each

control number. Books or records

space.

activity listed in Worksheet 5 if all the

relating to a form or its instructions must

3. If you have an overall loss (but

loss from that activity is reported on one

be retained as long as their contents

didn’t dispose of your entire interest in

form or schedule. Use Worksheet 7

may become material in the

the PTP to an unrelated person in a fully

instead of Worksheet 6 for each activity

administration of any Internal Revenue

taxable transaction during the year), the

with losses reported on two or more

law. Generally, tax returns and return

losses are allowed only to the extent of

different forms or schedules (or are

information are confidential, as required

the income, and the excess loss is

identified separately on the same form

by section 6103.

carried forward to use in a future year if

or schedule). Enter the net loss plus any

The time needed to complete and file

you have income to offset it. Report as a

prior year unallowed losses in column

this form will vary depending on

passive loss on the schedule or form

(a) of Worksheet 6 (or line 1a, column

individual circumstances. The estimated

you normally use the portion of the loss

(a), of Worksheet 7 if applicable). The

burden for individual taxpayers filing this

equal to the income. Report the income

losses in column (c) of Worksheet 6

form is approved under OMB control

as passive income on the form or

(column (e) of Worksheet 7) are the

number 1545-0074 and is included in

schedule you normally use.

allowed losses to report on your forms

the estimates shown in the instructions

or schedules. Report these losses and

Example. You have a Schedule E

for their individual income tax return.

any income from the PTP on the forms

loss of $12,000 (current year losses

The estimated burden for all other

and schedules normally used.

plus prior year unallowed losses) and

taxpayers who file this form is shown

Form 4797 gain of $7,200 from the

4. If you have an overall loss and you

below.

passive activities of a PTP. You report

disposed of your entire interest in the

the $7,200 gain on the appropriate line

PTP to an unrelated person in a fully

Recordkeeping

26 min.

of Form 4797. On Schedule E, Part II,

. . . . . . .

taxable transaction during the year, your

you report $7,200 of the losses as a

losses (including prior year unallowed

Learning about the law

passive loss in column (f). You carry

losses) allocable to the activity for the

or the form

22 min.

. . . . . . . . . .

forward the unallowed loss of $4,800

year aren’t limited by the passive loss

Preparing the form

1 hr., 52

($12,000 − $7,200).

. . . .

rules. A fully taxable transaction is one

min.

in which you recognize all your realized

If you have unallowed losses from

gain or loss. Report the income and

more than one activity of the PTP or

Copying, assembling,

losses on the forms and schedules

from the same activity of the PTP that

and sending the form

normally used.

must be reported on different forms or

to the IRS

48 min.

. . . . . . . . . . .

schedules, allocate the unallowed

For rules on the disposition of an

losses on a pro rata basis to figure the

entire interest reported using the

amount allowed for each activity or on

installment method, see

Disposition of

If you have comments concerning the

each form or schedule.

an Entire

Interest, earlier.

accuracy of these time estimates or

suggestions for making this form

To allocate and keep a record of

Paperwork Reduction Act Notice.

simpler, we would be happy to hear

the unallowed losses, use

TIP

We ask for the information on this form

from you. See the instructions for the tax

Worksheets 5, 6, and 7 of Form

to carry out the Internal Revenue laws of

return with which this form is filed.

8582.

the United States. You are required to

List each activity of the PTP in

give us the information. We need it to

Worksheet 5. Enter the overall loss from

ensure that you are complying with

-14-

Instructions for Form 8582 (2017)

Instructions For Form 8582 - Passive Activity Loss Limitations - 2017 Page 14

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