IRS Form 8582 2018 Passive Activity Loss Limitations

What Is IRS Form 8582?

IRS Form 8582, Passive Activity Loss Limitations is the document used by noncorporate taxpayers. Its main purpose is to help you to calculate the amount of any passive activity loss (PAL). You can use this form to report the application of the unallowed PALs for the previous tax year.

The issuing agency of the document is the Internal Revenue Service (IRS). The form is revised annually. Download the latest fillable IRS Form 8582 using the link provided below. To facilitate filing, the IRS also provides official Instructions for Form 8582 containing detailed explanations and useful examples.

The form is related to Form 8582-CR, Passive Activity Credit Limitations. This document is filled out by trusts, estates, and individuals in order to calculate the amount of a passive activity credit for the current tax year and unallowed credits any prior year. This form also serves to figure the amount of credit allowed for the current year, as well as to elect the increase of the credit property basis when a taxpayer disposes of the interest in an activity.

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Can I Deduct Passive Activity Loss?

A PAL is the excess of total losses from all passive activities you are involved in over the total income. Passive activities are considered:

  • Trade or business activities you did not materially participate in. The material participation is considered any work done in connection with the activity in which you own interest regardless of your capacity in this activity;
  • All rental activities, whether you participate in them or not.

When calculating their tax deductions, homeowners should mind that if they actively participate in rental real estate activities and meet the specific conditions, they are not subject to passive activity loss limitations.

Usually, if your losses from passive activities exceed the income from these activities, these losses are considered disallowed. The PALs that are not allowed in the current year are carried forward to the next taxable year until allowed. If you dispose of your entire interest in the activity, you are generally allowed to deduct any PALs disallowed before in full.

IRS Form 8582 Instructions

The IRS 8582 Form is a three-page form. Use the following instructions to file it properly:

  1. The document consists of the form itself and seven worksheets. Unlike for many other reports, these worksheets must be submitted with the tax return;
  2. Make copies of the completed form and worksheets before submitting it to the IRS;
  3. Part I. Passive Activity Loss. This part combines net income and net loss from all passive activities. Fill it out to determine if you have any PALs for the tax year you complete this form for;
    • Fill out Worksheets 1 - 3 before completing Part I;
    • Worksheet 1. Fill it out to make calculations for rental real estate activities with active participation;
    • Worksheet 2. Use this worksheet to calculate commercial revitalization deductions from your rental real estate activities;
    • Worksheet 3. Calculate here the rest of your passive activities;
    • If you need additional lines for any of the worksheets, copy the page containing this worksheet and attach it to the form. As an alternative, you can attach the schedule of the same format as the worksheet;
  4. Part II. Special Allowance for Rental Real Estate Activities with Active Participation. Calculate the maximum amount of rental loss allowed in this part;
  5. Part III. Special Allowance for Commercial Revitalization Deductions from Rental Real Estate Activities. Fill out this part to calculate the maximal commercial revitalization deductions;
  6. Part IV. Total Losses Allowed. Figure the total amount of all PALs allowed for the tax year;
  7. The rest of the Worksheets are optional.

Submit this document attached to your IRS Form 1040, U.S. Individual Income Tax Return or your IRS Form 1041, U.S. Income Tax Return for Estates and Trusts.

8582
Passive Activity Loss Limitations
OMB No. 1545-1008
2018
Form
See separate instructions.
Attach to Form 1040 or Form 1041.
Department of the Treasury
Attachment
88
Internal Revenue Service (99)
Go to www.irs.gov/Form8582 for instructions and the latest information.
Sequence No.
Identifying number
Name(s) shown on return
Part I
2018 Passive Activity Loss
Caution: Complete Worksheets 1, 2, and 3 before completing Part I.
Rental Real Estate Activities With Active Participation (For the definition of active participation, see
Special Allowance for Rental Real Estate Activities in the instructions.)
1 a Activities with net income (enter the amount from Worksheet 1,
1a
column (a))
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b Activities with net loss (enter the amount from Worksheet 1, column
1b (
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(b)) .
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c Prior years' unallowed losses (enter the amount from Worksheet 1,
1c (
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column (c))
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d Combine lines 1a, 1b, and 1c
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1d
Commercial Revitalization Deductions From Rental Real Estate Activities
2a (
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2 a Commercial revitalization deductions from Worksheet 2, column (a) .
b Prior year unallowed commercial revitalization deductions from
2b (
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Worksheet 2, column (b) .
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2c (
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c Add lines 2a and 2b
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All Other Passive Activities
3 a Activities with net income (enter the amount from Worksheet 3,
3a
column (a))
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b Activities with net loss (enter the amount from Worksheet 3, column
3b (
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(b)) .
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c Prior years' unallowed losses (enter the amount from Worksheet 3,
3c (
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column (c))
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d Combine lines 3a, 3b, and 3c
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3d
4
Combine lines 1d, 2c, and 3d. If this line is zero or more, stop here and include this form with
your return; all losses are allowed, including any prior year unallowed losses entered on line 1c,
2b, or 3c. Report the losses on the forms and schedules normally used
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If line 4 is a loss and:
• Line 1d is a loss, go to Part II.
• Line 2c is a loss (and line 1d is zero or more), skip Part II and go to Part III.
• Line 3d is a loss (and lines 1d and 2c are zero or more), skip Parts II and III and go to line 15.
Caution: If your filing status is married filing separately and you lived with your spouse at any time during the year, do not complete
Part II or Part III. Instead, go to line 15.
Part II
Special Allowance for Rental Real Estate Activities With Active Participation
Note: Enter all numbers in Part II as positive amounts. See instructions for an example.
5
Enter the smaller of the loss on line 1d or the loss on line 4
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Enter $150,000. If married filing separately, see instructions .
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Enter modified adjusted gross income, but not less than zero (see instructions)
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Note: If line 7 is greater than or equal to line 6, skip lines 8 and 9,
enter -0- on line 10. Otherwise, go to line 8.
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Subtract line 7 from line 6
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8
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Multiply line 8 by 50% (0.50). Do not enter more than $25,000. If married filing separately, see instructions
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Enter the smaller of line 5 or line 9
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10
If line 2c is a loss, go to Part III. Otherwise, go to line 15.
Part III
Special Allowance for Commercial Revitalization Deductions From Rental Real Estate Activities
Note: Enter all numbers in Part III as positive amounts. See the example for Part II in the instructions.
11
11
Enter $25,000 reduced by the amount, if any, on line 10. If married filing separately, see instructions
12
Enter the loss from line 4 .
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12
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Reduce line 12 by the amount on line 10
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Enter the smallest of line 2c (treated as a positive amount), line 11, or line 13
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14
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Part IV
Total Losses Allowed
15
Add the income, if any, on lines 1a and 3a and enter the total .
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Total losses allowed from all passive activities for 2018. Add lines 10, 14, and 15. See
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instructions to find out how to report the losses on your tax return .
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8582
For Paperwork Reduction Act Notice, see instructions.
Form
(2018)
Cat. No. 63704F
8582
Passive Activity Loss Limitations
OMB No. 1545-1008
2018
Form
See separate instructions.
Attach to Form 1040 or Form 1041.
Department of the Treasury
Attachment
88
Internal Revenue Service (99)
Go to www.irs.gov/Form8582 for instructions and the latest information.
Sequence No.
Identifying number
Name(s) shown on return
Part I
2018 Passive Activity Loss
Caution: Complete Worksheets 1, 2, and 3 before completing Part I.
Rental Real Estate Activities With Active Participation (For the definition of active participation, see
Special Allowance for Rental Real Estate Activities in the instructions.)
1 a Activities with net income (enter the amount from Worksheet 1,
1a
column (a))
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b Activities with net loss (enter the amount from Worksheet 1, column
1b (
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(b)) .
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c Prior years' unallowed losses (enter the amount from Worksheet 1,
1c (
)
column (c))
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d Combine lines 1a, 1b, and 1c
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1d
Commercial Revitalization Deductions From Rental Real Estate Activities
2a (
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2 a Commercial revitalization deductions from Worksheet 2, column (a) .
b Prior year unallowed commercial revitalization deductions from
2b (
)
Worksheet 2, column (b) .
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2c (
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c Add lines 2a and 2b
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All Other Passive Activities
3 a Activities with net income (enter the amount from Worksheet 3,
3a
column (a))
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b Activities with net loss (enter the amount from Worksheet 3, column
3b (
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(b)) .
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c Prior years' unallowed losses (enter the amount from Worksheet 3,
3c (
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column (c))
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d Combine lines 3a, 3b, and 3c
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3d
4
Combine lines 1d, 2c, and 3d. If this line is zero or more, stop here and include this form with
your return; all losses are allowed, including any prior year unallowed losses entered on line 1c,
2b, or 3c. Report the losses on the forms and schedules normally used
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4
If line 4 is a loss and:
• Line 1d is a loss, go to Part II.
• Line 2c is a loss (and line 1d is zero or more), skip Part II and go to Part III.
• Line 3d is a loss (and lines 1d and 2c are zero or more), skip Parts II and III and go to line 15.
Caution: If your filing status is married filing separately and you lived with your spouse at any time during the year, do not complete
Part II or Part III. Instead, go to line 15.
Part II
Special Allowance for Rental Real Estate Activities With Active Participation
Note: Enter all numbers in Part II as positive amounts. See instructions for an example.
5
Enter the smaller of the loss on line 1d or the loss on line 4
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5
6
6
Enter $150,000. If married filing separately, see instructions .
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7
Enter modified adjusted gross income, but not less than zero (see instructions)
7
Note: If line 7 is greater than or equal to line 6, skip lines 8 and 9,
enter -0- on line 10. Otherwise, go to line 8.
8
Subtract line 7 from line 6
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8
9
Multiply line 8 by 50% (0.50). Do not enter more than $25,000. If married filing separately, see instructions
9
10
Enter the smaller of line 5 or line 9
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10
If line 2c is a loss, go to Part III. Otherwise, go to line 15.
Part III
Special Allowance for Commercial Revitalization Deductions From Rental Real Estate Activities
Note: Enter all numbers in Part III as positive amounts. See the example for Part II in the instructions.
11
11
Enter $25,000 reduced by the amount, if any, on line 10. If married filing separately, see instructions
12
Enter the loss from line 4 .
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12
13
Reduce line 12 by the amount on line 10
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13
Enter the smallest of line 2c (treated as a positive amount), line 11, or line 13
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14
14
Part IV
Total Losses Allowed
15
Add the income, if any, on lines 1a and 3a and enter the total .
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15
16
Total losses allowed from all passive activities for 2018. Add lines 10, 14, and 15. See
16
instructions to find out how to report the losses on your tax return .
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8582
For Paperwork Reduction Act Notice, see instructions.
Form
(2018)
Cat. No. 63704F
2
Form 8582 (2018)
Page
Caution: The worksheets must be filed with your tax return. Keep a copy for your records.
Worksheet 1—For Form 8582, Lines 1a, 1b, and 1c (See instructions.)
Current year
Prior years
Overall gain or loss
Name of activity
(a) Net income
(b) Net loss
(c) Unallowed
(d) Gain
(e) Loss
(line 1a)
(line 1b)
loss (line 1c)
Total. Enter on Form 8582, lines 1a, 1b,
and 1c .
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Worksheet 2—For Form 8582, Lines 2a and 2b (See instructions.)
(a) Current year
(b) Prior year
Name of activity
(c) Overall loss
deductions (line 2a)
unallowed deductions (line 2b)
Total. Enter on Form 8582, lines 2a and
2b
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Worksheet 3—For Form 8582, Lines 3a, 3b, and 3c (See instructions.)
Current year
Prior years
Overall gain or loss
Name of activity
(a) Net income
(b) Net loss
(c) Unallowed
(d) Gain
(e) Loss
(line 3a)
(line 3b)
loss (line 3c)
Total. Enter on Form 8582, lines 3a, 3b,
and 3c .
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Worksheet 4—Use this worksheet if an amount is shown on Form 8582, line 10 or 14 (See instructions.)
Form or schedule
(d) Subtract
and line number
(c) Special
Name of activity
(a) Loss
(b) Ratio
column (c) from
to be reported on
allowance
column (a)
(see instructions)
Total
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Worksheet 5—Allocation of Unallowed Losses (See instructions.)
Form or schedule
and line number
Name of activity
(a) Loss
(b) Ratio
(c) Unallowed loss
to be reported on
(see instructions)
Total
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8582
Form
(2018)
3
Form 8582 (2018)
Page
Worksheet 6—Allowed Losses (See instructions.)
Form or schedule
and line number to
Name of activity
(a) Loss
(b) Unallowed loss
(c) Allowed loss
be reported on (see
instructions)
Total
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Worksheet 7—Activities With Losses Reported on Two or More Forms or Schedules (See instructions.)
Name of activity:
(d) Unallowed
(a)
(b)
(c) Ratio
(e) Allowed loss
loss
Form or schedule and line number
to be reported on (see
instructions):
1a Net loss plus prior year unallowed
loss from form or schedule .
b Net
income
from
form
or
schedule .
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c Subtract line 1b from line 1a. If zero or less, enter -0-
Form or schedule and line number
to be reported on (see
instructions):
1a Net loss plus prior year unallowed
loss from form or schedule .
b Net
income
from
form
or
schedule .
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c Subtract line 1b from line 1a. If zero or less, enter -0-
Form or schedule and line number
to be reported on (see
instructions):
1a Net loss plus prior year unallowed
loss from form or schedule .
b Net
income
from
form
or
schedule .
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c Subtract line 1b from line 1a. If zero or less, enter -0-
Total .
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8582
Form
(2018)

Download IRS Form 8582 2018 Passive Activity Loss Limitations

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