Instructions For Form 8810 - 2016 (Page 6 of 13) in pdf

Charitable contribution deductions.

limited by the PAL rules by multiplying the

Specific Instructions

Net operating loss deductions,

corporation's overall loss (which does not

percentage depletion carryovers under

include losses allowed in prior years) by the

Note. Complete Worksheets 1 and 2 before

section 613A(d), and capital loss carrybacks

following fraction.

completing Form 8810, Part I.

and carryovers.

Worksheet 1

Deductions and losses that would have

Gain recognized in the current year

been allowed for tax years beginning before

Use Worksheet 1 to figure the total current

Unrecognized gain as of the beginning

1987, but for basis or at-risk limitations.

year income, gains, deductions, and losses

of the current year

Net negative section 481 adjustments

for each passive activity.

allocated to activities other than passive

Lines 1 through 4. Enter on these lines the

activities. See Temporary Regulations

gross receipts and other income from

section 1.469-2T(d)(7).

Unallowed passive activity credits, unlike

passive activities and passive activity gains

Deductions for losses from fire, storm,

unallowed PALs, are not allowable when the

reported on Schedule D (Form 1120) and

shipwreck, or other casualty, or from theft, if

corporation disposes of its interest in an

Form 8949, as applicable, and Form 4797,

losses similar in cause and severity do not

activity. However, the corporation can elect

Sales of Business Property.

regularly recur in the activity.

to increase the basis of the credit property by

the amount of the original basis reduction of

Line 5. Enter total income on this line and in

Former Passive Activities

the property to the extent that the credit has

Worksheet 2, column (a).

not been allowed under the passive activity

A former passive activity is any activity that

Lines 6a through 6l. Enter passive activity

rules. Unallowed passive activity credits that

was a passive activity in a prior tax year but

deductions.

are not used to increase the basis of the

is not a passive activity in the current tax

credit property are carried forward until they

Lines 8 and 9. Enter on line 8 losses from

year. A prior year unallowed loss from a

are allowed. To make the election, complete

passive activities reported on Schedule D

former passive activity is allowed to the

Part III of Form 8810. No basis adjustment

(Form 1120) and Form 8949, as applicable.

extent of current year income from the

can be elected on a partial disposition of the

Enter on line 9 losses from passive activities

activity. The following apply.

corporation's interest in a passive activity.

reported on Form 4797.

If the current year net income from the

activity is less than the prior year unallowed

A partner in a PTP is not treated as

Line 10. Enter total deductions and losses

loss, enter the prior year unallowed loss and

having disposed of an entire interest in an

on this line and in Worksheet 2, column (b).

any current year net income from the activity

activity of a PTP until there is an entire

Gross receipts, gains from the sale of

on Form 8810 and the applicable

disposition of the partner's interest in the

business assets, capital gains, and other

worksheets.

PTP.

passive income should also be entered on

If the current year net income from the

the forms and schedules normally used.

Reporting an Entire Disposition

activity is more than or equal to the prior year

Allowable passive activity deductions and

unallowed loss from the activity, report the

When the corporation completely disposes

losses are entered on the forms and

income and loss on the forms and schedules

of an entire interest in a passive activity or a

schedules after Form 8810 is completed and

normally used; do not enter the amounts on

former passive activity, there may be net

the deductions and losses are allocated to

Form 8810.

income or loss and prior year unallowed

the activities.

If the activity has a net loss for the current

losses from the activity. All the income,

Worksheet 2

year, enter the prior year unallowed loss (but

gains, deductions, and losses are reported

not the current year loss) on Form 8810 and

on the forms and schedules normally used.

Columns (a) and (b). Enter in column (a)

the applicable worksheets.

the total income for the current year shown

Combine all income, gains, deductions,

For rules about prior year unallowed

on Worksheet 1, line 5. Enter in column (b)

and losses (including any prior year

credits from former passive activities, see

the total deductions and losses shown in

unallowed losses) from the activity for the tax

section 469(f). To report a disposition of a

Worksheet 1, line 10 .

year to see if the corporation has an overall

former passive activity, follow the rules under

gain or loss.

Column (c). Enter the prior year unallowed

Dispositions below.

losses from Worksheet 4, column (c),

If the corporation has an overall gain from

located in the 2015 Instructions for Form

a passive activity and also has other passive

Dispositions

8810.

activities to report on Form 8810, include the

income, gains, deductions, and losses

Disposition of Less Than an

Totals. Enter the totals from Worksheet 2,

(including prior year unallowed losses) on

Entire Interest

columns (a), (b), and (c) on Form 8810, lines

Worksheet 1. If this is the corporation's only

1a, 1b, and 1c.

passive activity or a former passive activity,

Gains and losses from the disposition of less

Columns (d) and (e). Combine income,

than an entire interest in an activity are

report the income, gains, deductions, and

deductions, and losses in columns (a)

losses (including prior year unallowed

treated as part of the net income or net loss

losses) on the forms and schedules normally

through (c) for each activity. Enter any

from the activity for the current year.

used, but do not enter them on the

overall gain in column (d) or any overall loss

Note. A disposition of less than substantially

in column (e). Do not enter the amounts from

worksheets or on Form 8810.

all of an entire interest does not trigger the

columns (d) and (e) on Form 8810. These

If the corporation has an overall loss

allowance of prior year unallowed losses.

amounts will be used when Form 8810 is

when combining all income, gains,

completed to figure the loss allowed for the

Disposition of an Entire Interest

deductions, and losses (including any prior

current year.

year unallowed losses) from the activity,

If the corporation disposed of its entire

report all the income, gains, deductions, and

Part I. 2016

interest in a passive activity or a former

losses on the forms and schedules normally

passive activity to an unrelated party in a

Passive Activity Loss

used, but do not enter them on the

fully taxable transaction during the tax year,

worksheets or on Form 8810.

the losses allocable to the activity for the

Lines 1d and 3

year are not limited by the PAL rules. A fully

Note. Members of a consolidated group,

If line 1d or 3 shows net income or zero, all

taxable transaction is a transaction in which

see Regulations section 1.469-1(h)(6) and

the deductions and losses are allowed

all the realized gain or loss is recognized.

Temporary Regulations sections 1.469-1T(h)

including any prior year unallowed losses

If the corporation is using the installment

(7) and (8) for rules on applying the PAL

entered on line 1c. Enter the deductions on

method to report this kind of disposition,

rules to dispositions of property and other

the appropriate lines of Form 1120, U.S.

figure the loss for the current year that is not

intercompany transactions.

Instructions for Form 8810 (2016)

-6-

Instructions For Form 8810 - 2016 Page 6

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