Instructions For Form 8582 - 2016 (Page 12 of 14) in pdf

Example. You enter a prior year

$870 (current year net income of $1,100

the passive loss rules. Report the

unallowed loss from Form 4797, Part I,

less a current year long-term capital

income and losses in columns (a), (b),

on line 1a. If the activity has a current

loss of $230). Line 16 of Form 8582

and (c) of Worksheets 1 and 3 and

year Form 4797, Part I, gain, enter the

shows an allowed loss of $1,100.

deductions in columns (a) and (b) of

gain on line 1b, column (a). If the activity

Worksheet 2 on the forms and

Since Activity II has an overall gain,

does not have a Form 4797, Part I, gain,

schedules normally used.

the amounts shown in columns (a) and

enter -0- on line 1b, column (a).

(b) of Worksheet 3 for that activity are

Line 16 is the same as the total of

reported on the proper forms and

Column (b). Subtract line 1b, column

lines 1b, 1c, 2a, 2b, 3b, and 3c. In

schedules and aren’t shown on any

(a), from line 1a, column (a), and enter

this case, all the losses in columns (b)

other worksheet.

the result in column (b). If line 1b,

and (c) of Worksheets 1 and 3 and all

column (a), is more than line 1a, column

the deductions in columns (a) and (b) of

Worksheet 5

(a), enter -0- in column (b).

Worksheet 2 are allowed in full under

Activity I has an unallowed loss of

the passive loss rules. Report the

$3,130 (line 4 of Form 8582 ($3,130)

Column (c). Divide each of the losses

income and losses in columns (a), (b),

less the sum of lines 10 and 14 of Form

entered in column (b) by the total of

and (c) of Worksheets 1 and 3 and

8582 (-0-) x 100%).

column (b) and enter the ratio in column

deductions in columns (a) and (b) of

(c). The total of this column must be

Worksheet 7

Worksheet 2 on the forms and

1.00.

This worksheet is used to figure the

schedules normally used.

Column (d). Multiply the unallowed

portion of the unallowed loss

Columns (a) and (c) of Worksheet 4

loss for this activity, found in Worksheet

attributable to the 28% rate loss and the

are the same amount. In this case, all

5, column (c), by each ratio in column

portion attributable to the non-28%-rate

the losses in columns (b) and (c) of

loss.

Worksheet 1 and all the deductions in

column (b) of Worksheet 7, also enter

The loss attributable to the 28% rate

columns (a) and (b) of Worksheet 2 are

-0- for that form or schedule in column

loss ($1,000) and the loss attributable to

allowed in full under the passive loss

(d).

the non-28%-rate loss ($3,000) are

rules. Report the income and losses in

The amount in column (d) is the

separate entries in Worksheet 7. The

columns (a), (b), and (c) of Worksheet 1

unallowed loss for 2016. Keep a record

ratio of each loss to the total of the two

and the deductions in columns (a) and

of this worksheet so you can use the

losses is figured as follows.

(b) of Worksheet 2 on the forms and

losses to figure your PAL next year.

$1,000/$4,000 = 0.25 and

schedules normally used.

$3,000/$4,000 = 0.75. Each of these

Column (e). Subtract the amount in

Losses allowed in column (c) of

ratios is multiplied by the unallowed loss

column (d) from the loss entered on

Worksheet 6. The amounts in column

for Activity I, shown in column (c) of

line 1a, column (a). This amount is the

Worksheet 5 ($3,130).

loss allowed for 2016 under the passive

deductions allowed for 2016 for the

Unallowed losses for Activity I:

loss rules. Report the amounts in this

activities listed in that worksheet. Report

28% rate loss: 0.25 x $3,130 =

column on the forms or schedules

the loss allowed from column (c) of

$782.50.

normally used, subject to any further

Worksheet 6 and the income, if any, for

Non-28%-rate loss: 0.75 x $3,130 =

limitations described in

Coordination

that activity from column (a) of

$2,347.50.

With Other

Limitations, earlier. The

Worksheet 1 or 3, on the form or

forms and schedules you use must

Allowed losses for Activity I:

schedule normally used.

show the losses from this column and

28% rate loss: $1,000 − $782.50 =

Losses allowed in column (e) of

the income, if any, for that activity from

$217.50.

Worksheet 7. The amounts in column

column (a) of Worksheet 1 or

Non-28%-rate loss: $3,000 −

(e) of Worksheet 7 are the losses or

Worksheet 3.

$2,347.50 = $652.50.

deductions allowed for 2016 for the

The total loss allowed for Activity I

Example of Form 8949

activity listed on that worksheet. Report

($870) is entered in Part II of Form

transactions. The taxpayer had the

the losses allowed from column (e) of

8949. The allowed 28% rate loss

following Form 8949 transactions from

Worksheet 7 and the income, if any, for

($217.50) is entered on the 28% Rate

passive activities in 2016.

that activity from column (a) of

Gain Worksheet (see the instructions for

Worksheet 1 or 3, on the forms or

Activity I

Schedule D, line 18). Keep a record of

schedules normally used.

A passive activity prior year

the unallowed 28% rate and

unallowed long-term capital loss (a 28%

Schedules C and F, and Form 4835.

non-28%-rate losses to figure the PAL

rate loss) of $1,000 and a current year

Enter on the net profit or loss line of your

for next year.

long-term capital loss (a non-28%-rate

Schedule C or E, or line 34c of Form

See the forms and schedules listed

loss) of $3,000.

4835, the allowed passive loss from the

under

How To Report Allowed

Losses,

worksheet. To the left of the entry

Activity II

next.

space, enter “PAL.”

A current year collectibles loss (a

How To Report

If the net profit or loss line on your

28% rate loss) of $230 and net income

form or schedule shows net profit for the

Allowed Losses

of $1,100 from Schedule E (Form 1040).

year, reduce the net profit by the

Worksheet 3

allowed loss from Worksheet 6 or 7, and

Line 4 is income. If line 4 of Form

Activity I has an overall loss of

enter the result on the net profit or loss

8582 shows net income or zero, all the

$4,000 (current year long-term capital

line.

losses in columns (b) and (c) of

loss of $3,000 and a prior year

Worksheets 1 and 3 and all the

Example. Schedule C shows net

unallowed long-term capital loss of

deductions in columns (a) and (b) of

profit for the year of $5,000 from a

$1,000). Activity II has an overall gain of

Worksheet 2 are allowed in full under

Instructions for Form 8582 (2016)

Instructions For Form 8582 - 2016 Page 12

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