Instructions For Form 8582 - Passive Activity Loss Limitations

net investment income upon an IRS

regroup the activities. The statement

Passive activity income includes all

examination.

must provide the names, addresses,

income from passive activities (with

and EINs, if applicable, for the activities

certain exceptions described in

Manner of regrouping. If you regroup

that are being regrouped. If two or more

Temporary Regulations section

your activities under this rule, you must

activities are being regrouped into a

1.469-2T(c)(2) and Regulations section

attach to your original or amended

single activity, the statement must

1.469-2(c)(2)), including gain from the

return, as applicable, a statement that

contain a declaration that the regrouped

disposition of an interest in a passive

satisfies the requirements described in

activities make up an appropriate

activity and from the disposition of

Regrouping

under Disclosure

economic unit for the measurement of

property used in a passive activity at the

Requirement, next.

gain or loss under the passive activity

time of the disposition.

Disclosure Requirement

rules. In addition, the statement must

Passive activity income doesn’t

contain an explanation of the material

For tax years beginning after January

include the following.

change in the facts and circumstances

24, 2010, the following disclosure

Income from an activity that isn’t a

that made the original grouping clearly

requirements for groupings apply.

passive activity.

inappropriate.

You’re required to report certain

Portfolio income, including interest

changes to your groupings that occur

Passive Activity Income

(other than self-charged interest treated

during the tax year to the IRS. If you fail

as passive activity income, discussed

and Deductions

to report these changes, each trade or

later), dividends, annuities, and royalties

business activity or rental activity will be

Take into account only passive activity

not derived in the ordinary course of a

treated as a separate activity. You’ll be

income and passive activity deductions

trade or business, and gain or loss from

considered to have made a timely

to figure your net income or net loss

the disposition of property that produces

disclosure if you filed all affected

from all passive activities or any passive

portfolio income or is held for

income tax returns consistent with the

activity.

investment (see section 163(d)(5)). See

claimed grouping and make the

Temporary Regulations section

required disclosure on the income tax

If your passive activity is reported on

1.469-2T(c)(3).

Schedule C, C-EZ, E, or F, and the

return for the year in which you first

Alaska Permanent Fund dividends.

discovered the failure to disclose. If the

activity has no prior year unallowed

Personal service income, including

IRS discovered the failure to disclose,

losses or any gain or loss from the

salaries, wages, commissions,

you must have reasonable cause for not

disposition of assets or an interest in the

self-employment income from trade or

making the required disclosure. For

activity, take into account only the

business activities in which you

more information on disclosure

passive activity income and passive

materially participated for the tax year,

requirements, see Revenue Procedure

activity deductions from the activity to

deferred compensation, taxable social

2010-13 available at

IRS.gov/irb/

figure the amount to enter on Form 8582

security and other retirement benefits,

2010-04_IRB/ar15.html.

and the worksheets.

and payments from partnerships to

New grouping. You must file a written

partners for personal services. See

If you own an interest in a passive

statement with your original income tax

Temporary Regulations section

activity through a partnership or an

return for the first tax year in which two

1.469-2T(c)(4).

S corporation, the partnership or

or more activities are originally grouped

Income from positive section 481

S corporation will generally provide you

into a single activity. The statement

adjustments allocated to activities other

with the net income or net loss from the

must provide the names, addresses,

than passive activities. See Temporary

passive activity. If, however, the

and employer identification numbers

Regulations section 1.469-2T(c)(5).

partnership or S corporation must state

(EINs), if applicable, for the activities

Income or gain from investments of

an item of gross income or deduction

being grouped as a single activity. In

working capital.

separately to you, and the gross income

addition, the statement must contain a

Income from an oil or gas property if

or deduction is passive activity gross

declaration that the grouped activities

you treated any loss from a working

income or a passive activity deduction

make up an appropriate economic unit

interest in the property for any tax year

(respectively), include that amount in

for the measurement of gain or loss

beginning after 1986 as a nonpassive

the net income or net loss entered on

under the passive activity rules.

loss under the rule excluding working

Form 8582 and the worksheets.

interests in oil and gas wells from

Addition to an existing grouping.

The partnership or S

passive activities (see item 3 under

You must file a written statement with

corporation doesn’t have a

Activities That Are Not Passive

your original income tax return for the

record of your prior year

Activities, earlier). See Regulations

CAUTION

tax year in which you add a new activity

unallowed losses from the passive

section 1.469-2(c)(6).

to an existing group. The statement

activities of the partnership or S

Any income from intangible property

must provide the name, address, and

corporation. If you had prior year

if your personal efforts significantly

EIN, if applicable, for the activity that’s

unallowed losses from these activities,

contributed to the creation of the

being added and for the activities in the

they can be found in column (c) of your

property.

existing group. In addition, the

2016 Worksheet 5.

Any income treated as not from a

statement must contain a declaration

passive activity under Temporary

that the activities make up an

Passive Activity Income

Regulations section 1.469-2T(f) and

appropriate economic unit for the

To figure your overall gain or loss from

Regulations section 1.469-2(f). See

measurement of gain or loss under the

all passive activities or any passive

Recharacterization of Passive

Income,

passive activity rules.

activity, take into account only passive

later.

Regrouping. You must file a written

activity income. Don’t enter income that

Overall gain from any interest in a

statement with your original income tax

isn’t passive activity income on Form

PTP (see item 2 under

Passive activity

return for the tax year in which you

8582 or the worksheets.

loss rules for partners in

PTPs, later).

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Instructions for Form 8582 (2017)

Instructions For Form 8582 - Passive Activity Loss Limitations - 2017 Page 6

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