Instructions For Form 8582 - 2016 (Page 6 of 14) in pdf

This rule applies equally to changes

activity income. Don’t enter income that

Regrouping. You must file a written

to modified adjusted gross income or

is not passive activity income on Form

statement with your original income tax

net investment income upon an IRS

8582 or the worksheets.

return for the tax year in which you

examination.

regroup the activities. The statement

Passive activity income includes all

must provide the names, addresses,

income from passive activities (with

Manner of regrouping. If you regroup

and EINs, if applicable, for the activities

certain exceptions described in

your activities under this rule, you must

that are being regrouped. If two or more

Temporary Regulations section

attach to your original or amended

activities are being regrouped into a

1.469-2T(c)(2) and Regulations section

return, as applicable, a statement that

single activity, the statement must

1.469-2(c)(2)), including gain from the

satisfies the requirements described in

contain a declaration that the regrouped

disposition of an interest in a passive

Regrouping

under

Disclosure

activities make up an appropriate

activity and from the disposition of

Requirement, later.

economic unit for the measurement of

property used in a passive activity at the

Disclosure Requirement

gain or loss under the passive activity

time of the disposition.

rules. In addition, the statement must

For tax years beginning after January

Passive activity income doesn’t

contain an explanation of the material

24, 2010, the following disclosure

include the following.

change in the facts and circumstances

requirements for groupings apply. You

Income from an activity that isn’t a

that made the original grouping clearly

are required to report certain changes to

passive activity.

your groupings that occur during the tax

inappropriate.

Portfolio income, including interest

year to the IRS. If you fail to report these

(other than self-charged interest treated

Passive Activity Income

changes, each trade or business activity

as passive activity income, discussed

or rental activity will be treated as a

and Deductions

later), dividends, annuities, and royalties

separate activity. You will be considered

Take into account only passive activity

not derived in the ordinary course of a

to have made a timely disclosure if you

income and passive activity deductions

trade or business, and gain or loss from

filed all affected income tax returns

to figure your net income or net loss

the disposition of property that produces

consistent with the claimed grouping

from all passive activities or any passive

portfolio income or is held for

and make the required disclosure on the

activity.

investment (see section 163(d)(5)). See

income tax return for the year in which

Temporary Regulations section

you first discovered the failure to

If your passive activity is reported on

1.469-2T(c)(3).

disclose. If the IRS discovered the

Schedule C, C-EZ, E, or F, and the

Alaska Permanent Fund dividends.

failure to disclose, you must have

activity has no prior year unallowed

Personal service income, including

reasonable cause for not making the

losses or any gain or loss from the

salaries, wages, commissions,

required disclosure. For more

disposition of assets or an interest in the

self-employment income from trade or

information on disclosure requirements,

activity, take into account only the

business activities in which you

see Revenue Procedure 2010-13

passive activity income and passive

materially participated for the tax year,

available at

activity deductions from the activity to

deferred compensation, taxable social

2010-04_IRB/ar15.html.

figure the amount to enter on Form 8582

security and other retirement benefits,

and the worksheets.

New grouping. You must file a written

and payments from partnerships to

statement with your original income tax

partners for personal services. See

If you own an interest in a passive

return for the first tax year in which two

Temporary Regulations section

activity through a partnership or an

or more activities are originally grouped

1.469-2T(c)(4).

S corporation, the partnership or

into a single activity. The statement

Income from positive section 481

S corporation will generally provide you

must provide the names, addresses,

adjustments allocated to activities other

with the net income or net loss from the

and employer identification numbers

than passive activities. See Temporary

passive activity. If, however, the

(EINs), if applicable, for the activities

Regulations section 1.469-2T(c)(5).

partnership or S corporation must state

being grouped as a single activity. In

Income or gain from investments of

an item of gross income or deduction

addition, the statement must contain a

working capital.

separately to you, and the gross income

declaration that the grouped activities

Income from an oil or gas property if

or deduction is passive activity gross

make up an appropriate economic unit

you treated any loss from a working

income or a passive activity deduction

for the measurement of gain or loss

interest in the property for any tax year

(respectively), include that amount in

under the passive activity rules.

beginning after 1986 as a nonpassive

the net income or net loss entered on

loss under the rule excluding working

Form 8582 and the worksheets.

Addition to an existing grouping.

interests in oil and gas wells from

You must file a written statement with

The partnership or S

passive activities (see item 3 under

your original income tax return for the

corporation does not have a

Activities That Are Not Passive

tax year in which you add a new activity

record of your prior year

Activities, earlier). See Regulations

CAUTION

to an existing group. The statement

unallowed losses from the passive

section 1.469-2(c)(6).

must provide the name, address, and

activities of the partnership or S

Any income from intangible property

EIN, if applicable, for the activity that is

corporation. If you had prior year

if your personal efforts significantly

being added and for the activities in the

unallowed losses from these activities,

contributed to the creation of the

existing group. In addition, the

they can be found in column (c) of your

property.

statement must contain a declaration

2015 Worksheet 5.

Any income treated as not from a

that the activities make up an

passive activity under Temporary

appropriate economic unit for the

Passive Activity Income

Regulations section 1.469-2T(f) and

measurement of gain or loss under the

To figure your overall gain or loss from

Regulations section 1.469-2(f). See

passive activity rules.

all passive activities or any passive

Recharacterization of Passive

Income,

activity, take into account only passive

later.

Instructions for Form 8582 (2016)

Instructions For Form 8582 - 2016 Page 6

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