Instructions For Form 8582 - 2016 (Page 3 of 14) in pdf

significant, all relevant facts and

Also, a partner's gross income from a

Only an individual, a qualifying

circumstances are taken into

guaranteed payment under section

estate, or a qualified revocable trust that

consideration, including the frequency

707(c) isn’t income from a rental activity.

made an election to treat the trust as

of the services, the type and amount of

The determination of whether the

part of the decedent's estate may

labor required to perform the services,

property used in the activity is provided

actively participate in a rental real estate

and the value of the services relative to

in the partner's capacity as an owner of

activity. Unless future regulations

the amount charged for use of the

an interest in the partnership is made on

provide an exception, limited partners

property.

the basis of all the facts and

aren’t treated as actively participating in

circumstances.

a partnership's rental real estate activity.

2. Extraordinary personal services

were provided in making the rental

Reporting Income and Losses

A qualifying estate is the estate of a

property available for customer use.

decedent for tax years ending less than

From the Activities

This applies only if the services are

2 years after the date of the decedent's

If an activity meets any of the five

performed by individuals and the

death if the decedent would have

exceptions listed above, it is not a rental

customers' use of the property is

satisfied the active participation

activity. You must then determine:

incidental to their receipt of the services.

requirements for the rental real estate

1. Whether your rental of the

activity for the tax year the decedent

3. Rental of the property is

property is a trade or business activity

died.

incidental to a nonrental activity.

(see

Trade or Business

Activities,

The rental of property is incidental to

A qualified revocable trust may elect

earlier), and, if so,

an activity of holding property for

to be treated as part of a decedent's

2. Whether you materially

investment if the main purpose of

estate for purposes of the special

participated in the activity for the tax

holding the property is to realize a gain

allowance for active participation in

year (see

Material

Participation, later).

from its appreciation and the gross

rental real estate activities. The election

rental income is less than 2% of the

must be made by both the executor (if

If the activity is a trade or business

smaller of the unadjusted basis or the

any) of the decedent's estate and the

activity in which you did not materially

fair market value (FMV) of the property.

trustee of the revocable trust. For

participate, enter the income and losses

details, see Regulations section

Unadjusted basis is the cost of the

from the activity on

Worksheet

1.645-1.

property without regard to depreciation

If the activity is a trade or business

deductions or any other basis

You aren’t considered to actively

activity in which you did materially

adjustment described in section 1016.

participate in a rental real estate activity

participate, report any income or loss

The rental of property is incidental to

if at any time during the tax year your

from the activity on the forms or

a trade or business activity if:

interest (including your spouse's

schedules normally used.

interest) in the activity was less than

a. You own an interest in the trade

10% (by value) of all interests in the

or business activity during the tax year,

If the rental activity didn’t meet any of

activity.

the five exceptions, it is generally a

b. The rental property was mainly

passive activity. However, special rules

Active participation is a less stringent

used in the trade or business activity

apply if you conduct the rental activity

requirement than material participation

during the tax year or during at least 2 of

through a publicly traded partnership

(see

Material

Participation, later). You

the 5 preceding tax years, and

(PTP) or if any of the rules described

may be treated as actively participating

c. The gross rental income from the

under

Recharacterization of Passive

if, for example, you participated in

property is less than 2% of the smaller

Income, later, apply. Also, see the

PTP

making management decisions or

of the unadjusted basis or the FMV of

rules, later.

arranged for others to provide services

the property.

(such as repairs) in a significant and

If none of the special rules apply,

Lodging provided for the employer's

bona fide sense. Management

enter the income and losses from the

convenience to an employee or the

decisions that may count as active

passive rental activity on Worksheet 1,

employee's spouse or dependents is

participation include:

2, or 3. See the instructions for

incidental to the activity or activities in

Approving new tenants,

Worksheets 1, 2, and

3, for details.

which the employee performs services.

Deciding on rental terms,

Approving capital or repair

4. You customarily make the rental

Special Allowance for

expenditures, and

property available during defined

Rental Real Estate

Other similar decisions.

business hours for nonexclusive use by

Activities

various customers.

The maximum special allowance is:

5. You provide property for use in a

$25,000 for single individuals and

Active participation. If you actively

nonrental activity of a partnership,

married individuals filing a joint return for

participated in a passive rental real

S corporation, or a joint venture in your

the tax year.

estate activity, you may be able to

capacity as an owner of an interest in

$12,500 for married individuals who

deduct up to $25,000 of loss from the

the partnership, S corporation, or joint

file separate returns for the tax year and

activity from your nonpassive income.

venture.

lived apart from their spouses at all

This special allowance is an exception

times during the tax year.

Example. If a partner contributes the

to the general rule disallowing losses in

$25,000 for a qualifying estate

use of property to a partnership, none of

excess of income from passive

reduced by the special allowance for

the partner's distributive share of

activities.

which the surviving spouse qualified.

partnership income is income from a

The special allowance isn’t available

rental activity unless the partnership is

if you were married, are filing a separate

Modified adjusted gross income lim

engaged in a rental activity.

return for the year, and lived with your

itation. If your modified adjusted gross

spouse at any time during the year.

income (see the instructions for

line

Instructions for Form 8582 (2016)

Instructions For Form 8582 - 2016 Page 3

Related Articles

Related forms

Related Categories