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:: Passive Activity Loss ATG - Exhibit 1.2: FORM 8582 – Line by Line Comments (Tax year 2003 and subsequent years)
Exhibit 1.2: FORM 8582 –
Line by Line Comments (Tax year
2003 and subsequent years)
Rental Real
Estate With Active Participation
1a Net
rental real estate income, but
no interest, dividends, gains on
stocks & bonds. Gain on
disposition of rental property
generally is also passive
income. While interest income
generally is not passive income,
self-charged interest income may
be passive income (Reg. §
1.469-7).
1b Net
rental real estate losses.
Exception:
No limited partners or Schedule
K-1s, Partner’s Shares of
Income, Credits, Deductions,
etc., with less than 10 percent
ownership.
1c Prior
year rental real estate losses
from last year’s Form 8582 W/S
6.
1d Sum
of lines 1a, 1b and 1c.
Commercial
Revitalization Deduction
2a
Commercial revitalization
deductions (generally from
Schedule K-1s)
2b Prior
year unallowed commercial
revitalization deductions
2c Sum
of 2a and 2b
All Other
Passive Activities
3a Net
income/gain from all other
passive activities, but no
interest, dividends, gains on
stocks and bonds.
3b
Includes equipment leases, Form
1065, U.S. Return of Partnership
Income and Form 1120S, U.S.
Income Tax Return for an S
Corporation, businesses in which
Taxpayer does not materially
participate, and many vacation
condos.
3c Prior
year losses from all other
passive activities form last
year’s Form 8582 W/S 5.
3d Sum
of line 3a, 3b and 3c.
Special
Allowance (Commonly called the
$25,000 offset)
7 MAGI:
If no loss on line 1d OR MAGI is
over $150,000 enter $150,000
here.
Total Losses
Allowed
15 Sum
of income on line 1a and 3a.
16 Sum
of all passive losses allowed in
the current year.
Passive losses
are allowed only to the extent
of passive income (line 15) and
$25,000 special
allowance (lines 10 and 14).Line
16 is most commonly reported in
two places: Rental losses on
the front of Schedule E and Form
1065 & Form 1120S losses on the
back of Schedule E in the
passive loss column.
Passive losses
from trusts are also reflected
on the back of Schedule E.
Allowable
passive losses from a sole
proprietorship are entered on
Schedule C.
Allowable
losses from a farm are entered
on Schedule F.
Losses which
are disallowed for the current
year are not reflected on the
face of Form 8582. They are
found on Worksheet 6.
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