Partner'S Instructions For Schedule K-1 (Form 1065-B) - Partner'S Share Of Income (Loss) From An Electing Large Partnership (For Partner'S Use Only) - 2016 Page 5
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13significant and bona fide sense.
The exclusion of amounts received
disposed of, any unused losses are
Management decisions that can count as
under an employer's adoption assistance
allowed in full in the year of disposition.
active participation include approving new
program.
If you have an overall gain from a PTP,
tenants, deciding rental terms, approving
the net gain is nonpassive income. In
Commercial revitalization
capital or repair expenditures, and other
addition, the nonpassive income is
deduction. The special $25,000
similar decisions.
included in investment income to figure
allowance for the commercial revitalization
An estate is a qualifying estate if the
your investment interest expense
deduction from rental real estate activities
decedent would have satisfied the active
deduction.
isn’t subject to the active participation
participation requirement for the activity
rules or modified adjusted gross income
Don’t report passive income, gains, or
for the tax year the decedent died. A
limits discussed above. See Code Q.
losses from a PTP on Form 8582. Instead,
qualifying estate is treated as actively
Commercial Revitalization Deduction,
use the following rules to figure and report
participating for tax years ending less than
later.
on the proper form or schedule your
2 years after the date of the decedent's
income, gains, and losses from passive
Special rules for certain other activi-
death.
activities that you held through each PTP
ties. If you have net income (loss),
you owned during the tax year.
Modified adjusted gross income
deductions, or credits from any activity to
limitation. The maximum special
1. Combine any current year income,
which special rules apply, the partnership
allowance that single individuals and
gains (losses), and any prior year
will identify the activity and all amounts
married individuals filing a joint return can
unallowed losses to see if you have an
relating to it on Schedule K-1 or on an
qualify for is $25,000. The maximum is
overall gain (loss) from the PTP. Include
attached statement.
$12,500 for married individuals who file
only the same types of income and losses
If you have net income subject to
separate returns and who lived apart all
you would include in your net income or
recharacterization under Temporary
times during the year. The maximum
loss from a non-PTP passive activity. See
Regulations section 1.469-2T(f) and
special allowance for which an estate can
Pub. 925 for more details.
Regulations section 1.469-2(f), report
qualify is $25,000 reduced by the special
2. If you have an overall gain, the net
such amounts according to the
allowance for which the surviving spouse
gain portion (total gain minus total losses)
Instructions for Form 8582 (or Form 8810).
qualifies.
is nonpassive income. On the form or
If you have net income (loss),
If your modified adjusted gross income
schedule you normally use, report the net
deductions, or credits from any of the
(defined below) is $100,000 or less
gain portion as nonpassive income and
following activities, treat such amounts as
($50,000 or less if married filing
the remaining income and the total losses
nonpassive and report them as instructed
separately), your loss is deductible up to
as passive income and loss. To the left of
in these instructions.
the amount of the maximum special
the entry space, enter “From PTP.” It is
Working interests in oil and gas wells.
allowance referred to in the preceding
important to identify the nonpassive
The rental of a dwelling unit any partner
paragraph. If your modified adjusted gross
income because the nonpassive portion is
used for personal purposes during the
income is more than $100,000 (more than
included in modified adjusted gross
year for more than the greater of 14 days
$50,000 if married filing separately), the
income for purposes of figuring on Form
or 10% of the number of days that the
special allowance is limited to 50% of the
8582 the “special allowance” for active
residence was rented at fair rental value.
difference between $150,000 ($75,000 if
participation in a non-PTP rental real
Trading personal property for the
married filing separately) and your
estate activity. In addition, the nonpassive
account of owners of interests in the
modified adjusted gross income. When
income is included in investment income
activity.
modified adjusted gross income is
when figuring your investment interest
Self-charged interest. The partnership
$150,000 or more ($75,000 or more if
expense deduction on Form 4952,
must report any “self-charged” interest
married filing separately), there is no
Investment Interest Expense Deduction.
special allowance.
income or expense that resulted from
Example. If you have Schedule E
loans between you and the partnership (or
Modified adjusted gross income is your
income of $8,000, and a Form 4797 prior
between the partnership and another
adjusted gross income figured without
year unallowed loss of $3,500 from the
partnership in which you have an interest).
taking into account the following amounts,
passive activities of a particular PTP, you
If there was more than one activity, the
if applicable.
have a $4,500 overall gain ($8,000 −
partnership will provide a statement
Any passive activity loss.
$3,500). On Schedule E (Form 1040),
allocating the interest income or expense
Any rental real estate loss allowed
line 28, report the $4,500 net gain as
with respect to each activity. The
under section 469(c)(7) to real estate
nonpassive income in column (j). In
self-charged interest rules don’t apply to
professionals (as defined earlier).
column (g), report the remaining
your partnership interest if the partnership
Any overall loss from a publicly traded
Schedule E gain of $3,500 ($8,000 −
made an election under Regulations
partnership.
$4,500). On the appropriate line of Form
section 1.469-7(g) to avoid the application
Any taxable social security or
4797, report the prior year unallowed loss
of these rules. See the Instructions for
equivalent railroad retirement benefits.
of $3,500. Be sure to enter “From PTP” to
Form 8582 for more information.
Any deductible contributions to an IRA
the left of each entry space.
or certain other qualified retirement plans
Publicly traded partnerships. The
3. If you have an overall loss (but did
under section 219.
passive activity limitations are applied
not dispose of your entire interest in the
The domestic production activities
separately for items (other than the
PTP to an unrelated person in a fully
deduction.
low-income housing credit and the
taxable transaction during the year), the
The student loan interest deduction.
rehabilitation credit) from each PTP. Thus,
losses are allowed to the extent of the
The tuition and fees deduction.
a net passive loss from a PTP may not be
income, and the excess loss is carried
The deduction for one-half of
deducted from other passive income.
forward to use in a future year when you
self-employment taxes.
Instead, a passive loss from a PTP is
have income to offset it. Report as a
The exclusion from income of interest
suspended and carried forward to be
passive loss on the schedule or form you
from Series EE and I U.S. Savings Bonds
applied against passive income from the
normally use the portion of the loss equal
used to pay higher education expenses.
same PTP in later years. If the partner's
to the income. Report the income as
entire interest in the PTP is completely
Instructions for Schedule K-1 (1065-B)
-5-
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