Instructions For Form 8810 - 2016 (Page 10 of 13) in pdf

that is attributable to a Form 8949 (or

through each PTP that the corporation

Form 1120

Schedule D (Form 1120)) or Form 4797 loss

owned an interest in during the tax year.

Gross receipts

$100,000

in column (c) of this worksheet.

Deductions

120,000

1. Combine any current year income, gains,

Column (d). Subtract column (c) from

deductions, and losses, and prior year

Net loss

($20,000)

column (a) and enter the results in this

unallowed losses to see if there is an overall

column. Enter the deductions allowed for

gain or loss. Include only the same types of

Form 1120 on the proper lines of Form 1120.

income and losses that would be included in

Form 8949

Form 4797

Enter the allowed losses on the appropriate

figuring net income or loss from a non-PTP

Gain

$1,000 Gain

$5,000

forms.

passive activity (see Passive Activity Income

Loss

(2,000) Loss

(2,000)

and Deductions, earlier).

Publicly Traded

Net loss

($1,000) Net gain

$3,000

2. If there is an overall gain, the net gain

Partnerships (PTPs)

portion (total income in excess of total

deductions and losses) is nonpassive

A PTP is a partnership whose interests are

Add the net losses of $20,000 and

income. Report the income, deductions, and

traded on an established securities market or

$1,000, for a total of $21,000. Divide the net

losses on the forms and schedules normally

are readily tradable on a secondary market

loss reported on each form by the total of the

used.

(or its substantial equivalent).

net losses, and multiply the result by the

3. If there is an overall loss (other than in a

unallowed loss of $18,000, as shown below.

An established securities market includes

year in which the corporation disposed of its

any national securities exchange and any

entire interest in the PTP), the deductions

Form

$20,000

local exchange registered under the

x $18,000= $17,143

and losses are allowed to the extent of the

1120:

$21,000

Securities Exchange Act of 1934 or

income, and the excess deductions and

exempted from registration because of the

losses are carried forward for use in a future

limited volume of transactions. It also

year when there is income to offset them.

includes any over-the-counter market.

Report the income and the loss allowed to

$1,000

Form 8949:

x $18,000 = $857

the extent of income on the form or schedule

A secondary market generally exists

$21,000

normally used.

where a person stands ready to make a

market in the interest. An interest is treated

Part II. 2016 Passive

On Form 4797, report the $2,000 loss and

as readily tradable if the interest is regularly

the $5,000 gain. On Worksheet 4, enter the

quoted by persons, such as brokers or

Activity Credits

$17,143 of unallowed deductions allocated

dealers, who are making a market in the

Use Form 8810, Part II, to figure the amount

to Form 1120 in column (c) on the line for

interest.

of credits allowed from passive activities for

total Form 1120 deductions. Enter the $857

The substantial equivalent of a secondary

the current year and the amount that is

of unallowed Form 8949 losses in column (c)

market exists where there is no identifiable

unallowed and carried forward.

of line 2. Use Worksheet 4 to allocate the

market maker, but holders of interests have a

$17,143 to the Form 1120 deductions and

Worksheet 5

readily available, regular, and ongoing

show the allowed and unallowed Form 8949

opportunity to sell or exchange interests

loss.

Complete Worksheet 5 before completing

through a public means of obtaining or

Part II. Use Worksheet 5 to figure the

Line 1, column (a). Enter the current year

providing information on offers to buy, sell, or

amounts to enter on Form 8810, lines 5a and

deductions for each Form 1120 expense

exchange interests. Similarly, the substantial

5b.

(Worksheet 1, lines 6a through 6l) plus any

equivalent of a secondary market exists

prior year unallowed Form 1120 deduction

where prospective buyers and sellers have

Column (a). Convert any current year

for that activity. For example, if Worksheet 1,

the opportunity to buy, sell, or exchange

qualified expenditures into credits and

line 6i shows current year depreciation for

interests in a timeframe and with the

complete Form 3800, General Business

the activity of $2,200, and the activity had

regularity and continuity that the existence of

Credit, before beginning Worksheet 5. See

prior year unallowed depreciation of $1,200,

a market maker would provide.

Cooperatives next for special instructions for

enter $3,400 on Worksheet 4, line 1i, column

certain cooperatives.

Special Instructions for PTPs

(a).

Enter the credits from Form 3800, lines 2,

Section 469(k) provides that the passive

Line 2, column (a). Enter any Form 8949

23, and 32, in Worksheet 5, column (a).

activity rules and limitations must be applied

losses (or any Schedule D (Form 1120)

Enter "Form 3800, line" followed by the

separately to items from each PTP.

losses, as applicable) from Worksheet 1,

appropriate line number (2, 23, or 32) in the

line 8, plus any prior year unallowed losses

“From Form” column. Separate the credits by

Losses from passive activities the

from the 2015 Form 8949 for that activity.

activity and by type before making entries in

corporation holds through a PTP generally

the worksheet. For example, a corporation

can be used only to offset income or gain

Line 3, column (a). Enter any Form 4797

has a distilled spirits credit from each of two

from passive activities of the same PTP. Any

losses from Worksheet 1, line 9, plus any

passive activities. Enter each distilled spirits

unallowed loss from a PTP passive activity is

prior year unallowed Form 4797 losses for

credit on separate lines in Worksheet 5,

carried forward and allowed in a tax year

that activity.

column (a). A corporation has a distilled

when the corporation has passive income

Line 1, column (b). Divide each of the

spirits credit and a disabled access credit

from the same PTP or when the corporation

individual Form 1120 deductions shown in

from the same passive activity. Enter the

disposes of its entire interest in that PTP.

column (a) by the total of all of the Form

distilled spirits credit and the disabled

Income from passive activities the

1120 deductions in column (a) and enter the

access credit on separate lines in Worksheet

corporation holds through a PTP cannot be

ratio for each of the deductions in column

5, column (a).

used to offset losses from passive activities

(b). The total of the ratios must equal 1.00.

Cooperatives. A closely held cooperative

the corporation holds through another PTP

Column (c). Allocate the portion of the loss

that is allocating part or all of a general

or losses from any other passive activities.

in Worksheet 3, column (c), among the Form

business credit to patrons will need to enter

PAL rules for partners in PTPs. Do not

1120 deductions by multiplying the

the credits being allocated on Worksheet 5

include any income, gains, deductions, or

unallowed loss attributable to the total Form

so that the passive activity rules can be

losses from PTP passive activities on Form

1120 deductions by each of the ratios in

applied before any part of the credit is

8810. Instead, use the following rules to

column (b). Enter the portion of the

allocated to patrons. For this purpose, Form

figure and report income, gains, deductions,

unallowed loss in Worksheet 3, column (c),

3800 should be completed using only credits

and losses from passive activities held

Instructions for Form 8810 (2016)

-10-

Instructions For Form 8810 - 2016 Page 10

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