Table of Contents
In general, you can deduct passive activity losses only from passive activity income (a limit on loss deductions). You carry any excess loss forward to the following year or years until used, or until deducted in the year you dispose of your entire interest in the activity in a fully taxable transaction. See Dispositions, later.
Before applying this limit on passive activity losses, you must first determine the amount of your loss disallowed under the at-risk rules explained in the second part of this publication.Unallowed passive activity credits, unlike unallowed passive activity losses, cannot be claimed when you dispose of your entire interest in an activity. However, to determine your gain or loss from the disposition, you can elect to increase the basis of the credit property by the amount of the original basis reduction for the credit, to the extent that the credit was not allowed because of the passive activity limits. You cannot elect to adjust the basis for a partial disposition of your interest in a passive activity.
See the instructions for Form 8582-CR for more information.
The passive activity rules apply to:
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Individuals,
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Estates,
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Trusts (other than grantor trusts),
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Personal service corporations, and
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Closely held corporations.
Even though the rules do not apply to grantor trusts, partnerships, and S corporations directly, they do apply to the owners of these entities.
For information about personal service corporations and closely held corporations, including definitions and how the passive activity rules apply to these corporations, see Form 8810 and its instructions.
There are two kinds of passive activities.
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Trade or business activities in which you do not materially participate during the year.
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Rental activities, even if you do materially participate in them, unless you are a real estate professional.
Material participation in a trade or business is discussed later, under Activities That Are Not Passive Activities.
A trade or business activity is an activity that:
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Involves the conduct of a trade or business (that is, deductions would be allowable under section 162 of the Internal Revenue Code if other limitations, such as the passive activity rules, did not apply),
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Is conducted in anticipation of starting a trade or business, or
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Involves research or experimental expenditures that are deductible under Internal Revenue Code section 174 (or that would be deductible if you chose to deduct rather than capitalize them).
A trade or business activity does not include a rental activity or the rental of property that is incidental to an activity of holding the property for investment.
You generally report trade or business activities on Schedule C, C-EZ, F, or in Part II or III of Schedule E.
A rental activity is a passive activity even if you materially participated in that activity, unless you materially participated as a real estate professional. See Real Estate Professional under Activities That Are Not Passive Activities, later. An activity is a rental activity if tangible property (real or personal) is used by customers or held for use by customers, and the gross income (or expected gross income) from the activity represents amounts paid (or to be paid) mainly for the use of the property. It does not matter whether the use is under a lease, a service contract, or some other arrangement.
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The average period of customer use of the property is 7 days or less. You figure the average period of customer use by dividing the total number of days in all rental periods by the number of rentals during the tax year. If the activity involves renting more than one class of property, multiply the average period of customer use of each class by a fraction. The numerator of the fraction is the gross rental income from that class of property and the denominator is the activity's total gross rental income. The activity's average period of customer use will equal the sum of the amounts for each class.
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The average period of customer use of the property, as figured in (1) above, is 30 days or less and you provide significant personal services with the rentals. Significant personal services include only services performed by individuals. To determine if personal services are significant, all relevant facts and circumstances are taken into consideration, including the frequency of the services, the type and amount of labor required to perform the services, and the value of the services relative to the amount charged for use of the property. Significant personal services do not include the following.
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Services needed to permit the lawful use of the property,
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Services to repair or improve property that would extend its useful life for a period substantially longer than the average rental, and
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Services that are similar to those commonly provided with long-term rentals of real estate, such as cleaning and maintenance of common areas or routine repairs.
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You provide extraordinary personal services in making the rental property available for customer use. Services are extraordinary personal services if they are performed by individuals and the customers' use of the property is incidental to their receipt of the services.
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The rental is incidental to a nonrental activity. The rental of property is incidental to an activity of holding property for investment if the main purpose of holding the property is to realize a gain from its appreciation and the gross rental income from the property is less than 2% of the smaller of the property's unadjusted basis or fair market value. The unadjusted basis of property is its cost not reduced by depreciation or any other basis adjustment. The rental of property is incidental to a trade or business activity if all of the following apply.
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You own an interest in the trade or business activity during the year.
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The rental property was used mainly in that trade or business activity during the current year, or during at least 2 of the 5 preceding tax years.
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Your gross rental income from the property is less than 2% of the smaller of its unadjusted basis or fair market value. Lodging provided to an employee or the employee's spouse or dependents is incidental to the activity or activities in which the employee performs services if the lodging is furnished for the employer's convenience.
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You customarily make the rental property available during defined business hours for nonexclusive use by various customers.
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You provide the property for use in a nonrental activity in your capacity as an owner of an interest in the partnership, S corporation, or joint venture conducting that activity.
Example.
Kate, a single taxpayer, has $70,000 in wages, $15,000 income from a limited partnership, a $26,000 loss from rental real estate activities in which she actively participated, and is not subject to the modified adjusted gross income phaseout rule. She can use $15,000 of her $26,000 loss to offset her $15,000 passive income from the partnership. She actively participated in her rental real estate activities, so she can use the remaining $11,000 rental real estate loss to offset $11,000 of her nonpassive income (wages).
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2 years after the decedent's death if no estate tax return is required, or
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6 months after the estate tax liability is finally determined if an estate tax return is required.
Example.
Mike, a single taxpayer, had the following income and loss during the tax year:
Salary | $42,300 | |
Dividends | 300 | |
Interest | 1,400 | |
Rental loss | (4,000) |
The rental loss came from a house Mike owned. He advertised and rented the house to the current tenant himself. He also collected the rents and did the repairs or hired someone to do them.
Even though the rental loss is a loss from a passive activity, Mike can use the entire $4,000 loss to offset his other income because he actively participated.
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Taxable social security and tier 1 railroad retirement benefits.
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Deductible contributions to individual retirement accounts (IRAs) and section 501(c)(18) pension plans.
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The exclusion from income of interest from qualified U.S. savings bonds used to pay qualified higher education expenses.
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The exclusion from income of amounts received from an employer's adoption assistance program.
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Passive activity income or loss included on Form 8582.
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Any rental real estate loss allowed because you materially participated in the rental activity as a real estate professional (as discussed later, under Activities That Are Not Passive Activities).
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Any overall loss from a publicly traded partnership (see Publicly Traded Partnerships (PTPs) in the instructions for Form 8582).
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The deduction for one-half of self-employment tax.
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The deduction for domestic production activities.
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The deduction allowed for interest on student loans.
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The deduction for qualified tuition and related expenses.
Example.
During 2008, John was unmarried and was not a real estate professional. For 2008, he had $120,000 in salary and a $31,000 loss from his rental real estate activities in which he actively participated. His modified adjusted gross income is $120,000. When he files his 2008 return, he can deduct only $15,000 of his passive activity loss. He must carry over the remaining $16,000 passive activity loss to 2009. He figures his deduction and carryover as follows:
Adjusted gross income, modified as required |
$120,000 | |
Minus amount not subject to phaseout | 100,000 | |
Amount subject to phaseout rule | $20,000 | |
Multiply by 50% | × 50% | |
Required reduction to special allowance | $10,000 | |
Maximum special allowance | $25,000 | |
Minus required reduction (see above) | 10,000 | |
Adjusted special allowance | $15,000 | |
Passive loss from rental real estate | $31,000 | |
Deduction allowable/Adjusted special allowance (see above) |
15,000 | |
Amount that must be carried forward | $16,000 |
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The portion of passive activity losses not attributable to the commercial revitalization deduction.
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The portion of passive activity losses attributable to the commercial revitalization deduction.
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The portion of passive activity credits attributable to credits other than the rehabilitation and low-income housing credits.
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The portion of passive activity credits attributable to the rehabilitation credit.
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The portion of passive activity credits attributable to the low-income housing credit.
The following are not passive activities.
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Trade or business activities in which you materially participated for the tax year.
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A working interest in an oil or gas well which you hold directly or through an entity that does not limit your liability (such as a general partner interest in a partnership). It does not matter whether you materially participated in the activity for the tax year. However, if your liability was limited for part of the year (for example, you converted your general partner interest to a limited partner interest during the year) and you had a net loss from the well for the year, some of your income and deductions from the working interest may be treated as passive activity gross income and passive activity deductions. See Temporary Regulations section 1.469-1T(e) (4)(ii).
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The rental of a dwelling unit that you also used for personal purposes during the year for more than the greater of 14 days or 10% of the number of days during the year that the home was rented at a fair rental.
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An activity of trading personal property for the account of those who own interests in the activity. See Temporary Regulations section 1.469-1T(e)(6).
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Rental real estate activities in which you materially participated as a real estate professional. See Real Estate Professional, later.
You should not enter income and losses from these activities on Form 8582. Instead, enter them on the forms or schedules you would normally use.
A trade or business activity is not a passive activity if you materially participated in the activity.
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You participated in the activity for more than 500 hours.
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Your participation was substantially all the participation in the activity of all individuals for the tax year, including the participation of individuals who did not own any interest in the activity.
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You participated in the activity for more than 100 hours during the tax year, and you participated at least as much as any other individual (including individuals who did not own any interest in the activity) for the year.
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The activity is a significant participation activity, and you participated in all significant participation activities for more than 500 hours. A significant participation activity is any trade or business activity in which you participated for more than 100 hours during the year and in which you did not materially participate under any of the material participation tests, other than this test. See Significant Participation Passive Activities, under Recharacterization of Passive Income, later.
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You materially participated in the activity for any 5 (whether or not consecutive) of the 10 immediately preceding tax years.
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The activity is a personal service activity in which you materially participated for any 3 (whether or not consecutive) preceding tax years. An activity is a personal service activity if it involves the performance of personal services in the fields of health (including veterinary services), law, engineering, architecture, accounting, actuarial science, performing arts, consulting, or any other trade or business in which capital is not a material income-producing factor.
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Based on all the facts and circumstances, you participated in the activity on a regular, continuous, and substantial basis during the year.
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Any person other than you received compensation for managing the activity, or
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Any individual spent more hours during the tax year managing the activity than you did (regardless of whether the individual was compensated for the management services).
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The work is not work that is customarily done by the owner of that type of activity.
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One of your main reasons for doing the work is to avoid the disallowance of any loss or credit from the activity under the passive activity rules.
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Studying and reviewing financial statements or reports on operations of the activity,
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Preparing or compiling summaries or analyses of the finances or operations of the activity for your own use, and
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Monitoring the finances or operations of the activity in a nonmanagerial capacity.
Generally, rental activities are passive activities even if you materially participated in them. However, if you qualified as a real estate professional, rental real estate activities in which you materially participated are not passive activities. For this purpose, each interest you have in a rental real estate activity is a separate activity, unless you choose to treat all interests in rental real estate activities as one activity. See the instructions for Schedule E (Form 1040) for information about making this choice.
If you qualified as a real estate professional for 2008, report income or losses from rental real estate activities in which you materially participated as nonpassive income or losses, and complete line 43 of Schedule E (Form 1040). If you also have an unallowed loss from these activities from an earlier year when you did not qualify, see Treatment of former passive activities under Passive Activities, earlier.
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More than half of the personal services you performed in all trades or businesses during the tax year were performed in real property trades or businesses in which you materially participated.
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You performed more than 750 hours of services during the tax year in real property trades or businesses in which you materially participated.
In figuring your net income or loss from a passive activity, take into account only passive activity income and passive activity deductions.
Passive activity income includes all income from passive activities and generally includes gain from disposition of an interest in a passive activity or property used in a passive activity.
Passive activity income does not include the following items.
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Income from an activity that is not a passive activity. These activities are discussed under Activities That Are Not Passive Activities, earlier.
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Portfolio income. This includes interest, dividends, annuities, and royalties not derived in the ordinary course of a trade or business. It includes gain or loss from the disposition of property that produces these types of income or that is held for investment. The exclusion for portfolio income does not apply to self-charged interest treated as passive activity income. For more information on self-charged interest, see Self-charged interest, earlier.
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Personal service income. This includes salaries, wages, commissions, self-employment income from trade or business activities in which you materially participated, deferred compensation, taxable social security and other retirement benefits, and payments from partnerships to partners for personal services.
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Income from positive section 481 adjustments allocated to activities other than passive activities. (Section 481 adjustments are adjustments that must be made due to changes in your accounting method.)
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Income or gain from investments of working capital.
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Income from an oil or gas property if you treated any loss from a working interest in the property for any tax year beginning after 1986 as a nonpassive loss, as discussed in item (2) under Activities That Are Not Passive Activities, earlier. This also applies to income from other oil and gas property the basis of which is determined wholly or partly by the basis of the property in the preceding sentence.
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Any income from intangible property, such as a patent, copyright, or literary, musical, or artistic composition, if your personal efforts significantly contributed to the creation of the property.
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Any other income that must be treated as nonpassive income. See Recharacterization of Passive Income, later.
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Overall gain from any interest in a publicly traded partnership. See Publicly Traded Partnerships (PTPs) in the instructions for Form 8582.
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State, local, and foreign income tax refunds.
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Income from a covenant not to compete.
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Reimbursement of a casualty or theft loss included in gross income to recover all or part of a prior year loss deduction, if the loss deduction was not a passive activity deduction.
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Alaska Permanent Fund dividends.
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Cancellation of debt income, if at the time the debt is discharged the debt is not allocated to passive activities under the interest expense allocation rules. See chapter 4 of Publication 535, Business Expenses, for information about the rules for allocating interest.
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$10,000, or
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10% of the total of the fair market value of your interest in the property and the fair market value of all other property used in that activity immediately before the disposition.
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You used the property in a passive activity for 20% of the time you held your interest in the property.
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You used the property in a passive activity for the entire 24-month period before its disposition.
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At the time of disposition, you held your interest in the property in a dealing activity (an activity that involves holding the property or similar property mainly for sale to customers in the ordinary course of a trade or business).
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Your other activities included a nondealing activity (an activity that does not involve holding similar property for sale to customers in the ordinary course of a trade or business) in which you used the property for more than 80% of the period you held it.
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You did not acquire or hold your interest in the property for the main purpose of selling it to customers in the ordinary course of a trade or business.
Passive activity deductions include all deductions from activities that are passive activities for the current tax year and all deductions from passive activities that were disallowed under the passive loss rules in prior tax years and carried forward to the current tax year. They also include losses from dispositions of property used in a passive activity at the time of the disposition and losses from a disposition of less than your entire interest in a passive activity.
Passive activity deductions do not include the following items.
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Deductions for expenses (other than interest expense) that are clearly and directly allocable to portfolio income.
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Qualified home mortgage interest, capitalized interest expenses, and other interest expenses (other than self-charged interest) properly allocable to passive activities. For more information on self-charged interest, see Self-charged interest under Passive Activity Income and Deductions, earlier.
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Losses from dispositions of property that produce portfolio income or property held for investment.
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State, local, and foreign income taxes.
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Miscellaneous itemized deductions that may be disallowed because of the 2%-of-adjusted-gross-income limit.
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Charitable contribution deductions.
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Net operating loss deductions.
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Percentage depletion carryovers for oil and gas wells.
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Capital loss carrybacks and carryovers.
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Deductions and losses that would have been allowed for tax years beginning before 1987 but for basis or at-risk limits.
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Net negative section 481 adjustments allocated to activities other than passive activities. (Section 481 adjustments are adjustments required due to changes in accounting methods.)
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Casualty and theft losses, unless losses similar in cause and severity recur regularly in the activity.
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The deduction for one-half of self-employment tax.
You can treat one or more trade or business activities, or rental activities, as a single activity if those activities form an appropriate economic unit for measuring gain or loss under the passive activity rules.
Grouping is important for a number of reasons. If you group two activities into one larger activity, you need only show material participation in the activity as a whole. But if the two activities are separate, you must show material participation in each one. On the other hand, if you group two activities into one larger activity and you dispose of one of the two, then you have disposed of only part of your entire interest in the activity. But if the two activities are separate and you dispose of one of them, then you have disposed of your entire interest in that activity.
Grouping can also be important in determining whether you meet the 10% ownership requirement for actively participating in a rental real estate activity.
Generally, to determine if activities form an appropriate economic unit, you must consider all the relevant facts and circumstances. You can use any reasonable method of applying the relevant facts and circumstances in grouping activities. The following factors have the greatest weight in determining whether activities form an appropriate economic unit. All of the factors do not have to apply to treat more than one activity as a single activity. The factors that you should consider are:
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The similarities and differences in the types of trades or businesses,
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The extent of common control,
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The extent of common ownership,
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The geographical location, and
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The interdependencies between or among activities, which may include the extent to which the activities:
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Buy or sell goods between or among themselves,
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Involve products or services that are generally provided together,
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Have the same customers,
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Have the same employees, or
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Use a single set of books and records to account for the activities.
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Example 1.
John Jackson owns a bakery and a movie theater at a shopping mall in Baltimore and a bakery and movie theater in Philadelphia. Based on all the relevant facts and circumstances, there may be more than one reasonable method for grouping John's activities. For example, John may be able to group the movie theaters and the bakeries into:
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One activity,
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A movie theater activity and a bakery activity,
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A Baltimore activity and a Philadelphia activity, or
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Four separate activities.
Example 2.
Betty is a partner in ABC partnership, which sells nonfood items to grocery stores. Betty is also a partner in DEF (a trucking business). ABC and DEF are under common control. The main part of DEF's business is transporting goods for ABC. DEF is the only trucking business in which Betty is involved. Based on the rules of this section, Betty treats ABC's wholesale activity and DEF's trucking activity as a single activity.
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The rental activity is insubstantial in relation to the trade or business activity,
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The trade or business activity is insubstantial in relation to the rental activity, or
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Each owner of the trade or business activity has the same ownership interest in the rental activity, in which case the part of the rental activity that involves the rental of items of property for use in the trade or business activity may be grouped with the trade or business activity.
Example.
Herbert and Wilma are married and file a joint return. Healthy Food, an S corporation, is a grocery store business. Herbert is Healthy Food's only shareholder. Plum Tower, an S corporation, owns and rents out the building. Wilma is Plum Tower's only shareholder. Plum Tower rents part of its building to Healthy Food. Plum Tower's grocery store rental business and Healthy Food's grocery business are not insubstantial in relation to each other.
Herbert and Wilma file a joint return, so they are treated as one taxpayer for purposes of the passive activity rules. The same owner (Herbert and Wilma) owns both Healthy Food and Plum Tower with the same ownership interest (100% in each). If the grouping forms an appropriate economic unit, as discussed earlier, Herbert and Wilma can group Plum Tower's grocery store rental and Healthy Food's grocery business into a single trade or business activity.
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Holding, producing, or distributing motion picture films or video tapes.
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Farming.
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Leasing any section 1245 property (as defined in section 1245(a)(3) of the Internal Revenue Code). For a list of section 1245 property, see Section 1245 property under Activities Covered by the At-Risk Rules, later.
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Exploring for, or exploiting, oil and gas resources.
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Exploring for, or exploiting, geothermal deposits.
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Has an interest in an enterprise other than as a limited partner, and
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Does not actively participate in the management of the enterprise.
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With each other,
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With activities conducted directly by you, or
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With activities conducted through other entities.
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The amount of deductions and credits disallowed in prior years under the passive activity rules that is allocable to the part of the activity disposed of, and
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The amount of gross income and any other deductions and credits for the current tax year that is allocable to the part of the activity disposed of.
Net income from the following passive activities may have to be recharacterized and excluded from passive activity income.
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Significant participation passive activities,
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Rental of property when less than 30% of the unadjusted basis of the property is subject to depreciation,
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Equity-financed lending activities,
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Rental of property incidental to development activities,
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Rental of property to nonpassive activities, and
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Licensing of intangible property by
pass-through entities.
If you are engaged in or have an interest in one of these activities during the tax year (either directly or through a partnership or an S corporation), combine the income and losses from the activity to determine if you have a net loss or net income from that activity.
If the result is a net loss, treat the income and losses the same as any other income or losses from that type of passive activity (trade or business activity or rental activity).
If the result is net income, do not enter any of the income or losses from the activity or property on Form 8582 or its worksheets. Instead, enter income or losses on the form and schedules you normally use. However, see Significant Participation Passive Activities, later, if the activity is a significant participation passive activity and you also have a net loss from a different significant participation passive activity.
A significant participation passive activity is any trade or business activity in which you participated for more than 100 hours during the tax year but did not materially participate.
If your gross income from all significant participation passive activities is more than your deductions from those activities, a part of your net income from each significant participation passive activity is treated as nonpassive income.
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The corporation is not treated as materially participating in the activity for the year.
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One or more individuals, each of whom is treated as significantly participating in the activity, directly or indirectly hold (in total) more than 50% (by value) of the corporation's outstanding stock.
Name of activity |
(a) Hours of participation | (b) Net loss |
(c) Net income |
(d) Combine totals of cols. (b) and (c) | |
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( | ) | ///////////////////////////////////////// | |||
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( | ) | ///////////////////////////////////////// | |||
Totals | ( | ) |
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The activity's current year net loss (if any) plus prior year unallowed losses (if any), or
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The excess of prior year unallowed losses over the current year net income (if any). Enter -0- here if the prior year unallowed loss is the same as the current year net income.
If you have net passive income (including prior year unallowed losses) from renting property in a rental activity, and less than 30% of the unadjusted basis of the property is subject to depreciation, you treat the net passive income as nonpassive income.
Example.
Calvin acquires vacant land for $300,000, constructs improvements at a cost of $100,000, and leases the land and improvements to a tenant. He then sells the land and improvements for $600,000, realizing a gain of $200,000 on the disposition.
The unadjusted basis of the improvements ($100,000) equals 25% of the unadjusted basis of all property ($400,000) used in the rental activity. Calvin's net passive income from the activity (which is figured with the gain from the disposition, including gain from the improvements) is treated as nonpassive income.
If you have gross income from an equity-financed lending activity, the lesser of the net passive income or the equity-financed interest income is nonpassive income.
For more information, see Temporary Regulations section 1.469-2T(f)(4).
Net income from this type of activity will be treated as nonpassive income if all of the following apply.
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You recognize gain from the sale, exchange, or other disposition of the rental property during the tax year.
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You started to rent the property less than 12 months before the date of disposition.
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You materially participated or significantly participated for any tax year in an activity that involved the performance of services for the purpose of enhancing the value of the property (or any other item of property if the basis of the property disposed of is determined in whole or in part by reference to the basis of that item of property).
For more information, see Regulations section 1.469-2(f)(5).
If you rent property to a trade or business activity in which you materially participated, net rental income from the property is treated as nonpassive income. This rule does not apply to net income from renting property under a written binding contract entered into before February 19, 1988. It also does not apply to property just described under Rental of Property Incidental to a Development Activity.
Net royalty income from intangible property held by a pass-through entity in which you own an interest may be treated as nonpassive royalty income. This applies if you acquired your interest in the pass-through entity after the partnership, S corporation, estate, or trust created the intangible property or performed substantial services or incurred substantial costs for developing or marketing the intangible property.
This recharacterization rule does not apply if:
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The expenses reasonably incurred by the entity in developing or marketing the property exceed 50% of the gross royalties from licensing the property that are includible in your gross income for the tax year, or
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Your share of the expenses reasonably incurred by the entity in developing or marketing the property for all tax years exceeded 25% of the fair market value of your interest in the intangible property at the time you acquired your interest in the entity.
For purposes of (2) above, capital expenditures are taken into account for the entity's tax year in which the expenditure is chargeable to a capital account, and your share of the expenditure is figured as if it were allowed as a deduction for the tax year.
Any passive activity losses (but not credits) that have not been allowed (including current year losses) generally are allowed in full in the tax year you dispose of your entire interest in the passive (or former passive) activity. However, for the losses to be allowed, you must dispose of your entire interest in the activity in a transaction in which all realized gain or loss is recognized. Also, the person acquiring the interest from you must not be related to you.
Name of activity with net income |
(a) Net income |
(b) Ratio See instructions |
(c) Nonpassive income See instructions |
(d) Passive income Subtract col. (c) from col. (a) |
---|---|---|---|---|
Totals | 1.000 |
If you have a capital loss on the disposition of an interest in a passive activity, the loss may be limited by the capital loss rules. The limit is generally $3,000 for individuals ($1,500 in the case of married individuals filing separate returns). See Publication 544, Sales and Other Dispositions of Assets, for more information.
Example.
Ray earned a $60,000 salary and owned one passive activity through a 5% interest in the B Limited Partnership. In 2008, he sold his entire partnership interest to an unrelated person for $30,000. His adjusted basis in the partnership interest was $42,000, and he had carried over $2,000 of passive activity losses from the activity.
Ray's deductible loss for 2008 is $5,000, figured as follows:
Sales price | $30,000 | |
Minus: adjusted basis | 42,000 | |
Capital loss | $12,000 | |
Minus: capital loss limit | 3,000 | |
Capital loss carryover | $9,000 | |
Allowable capital loss on sale | $3,000 | |
Carryover losses allowable | 2,000 | |
Total current deductible loss | $5,000 | |
Ray deducts the $5,000 total current deductible loss in 2008. He must carry over the remaining $9,000 capital loss, which is not subject to the passive activity loss limit. He will treat it like any other capital loss carryover.
Example.
John Ash has a total gain of $10,000 from the sale of an entire interest in a passive activity. Under the installment method he reports $2,000 of gain each year, including the year of sale. For the first year, 20% (2,000/10,000) of the losses are allowed. For the second year, 25% (2,000/8,000) of the remaining losses are allowed.
More than one form or schedule may be required for reporting your passive activities. The actual number of forms depends on the number and types of activities you must report. Some forms and schedules that may be required are:
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Schedule C (Form 1040), Profit or Loss From Business,
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Schedule D (Form 1040), Capital Gains and Losses,
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Schedule E (Form 1040), Supplemental Income and Loss,
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Schedule F (Form 1040), Profit or Loss From Farming,
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Form 4797, Sales of Business Property,
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Form 6252, Installment Sale Income,
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Form 8582, Passive Activity Loss Limitations, and
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Form 8582-CR, Passive Activity Credit Limitations.
Regardless of the number or complexity of passive activities you have, you should use only one Form 8582.
The following example shows how to report your passive activities. In addition to Form 1040, Charles and Lily Woods use Form 8582 (to figure allowed passive activity deductions), Schedule E (to report rental activities and partnership activities), Form 4797 (to figure the gain and allowable loss from assets sold that were used in the activities), and Schedule D (to report the sale of partnership interests).
Charles and Lily are married, file a joint return, and have combined wages of $132,000 in 2008. They own interests in the activities listed below. They are at risk for their investment in the activities. They did not materially participate in any of the business activities. They actively participated in the rental real estate activities in 2008 and all prior years. Charles and Lily are not real estate professionals.
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Activity A is a rental real estate activity. The income and expenses are reported on Schedule E. Charles and Lily's records show a loss from operations of $15,000 in 2008. Their records also show a gain of $2,776 from the sale in January 2008 of section 1231 assets used in the activity. The section 1231 gain is reported in Part I of Form 4797 and is identified as being from a passive activity (FPA). For 2007, they completed the worksheets for Form 8582 and calculated that $6,667 of Activity A's Schedule E loss for 2007 was disallowed by the passive activity rules. That loss is carried over to 2008 as a prior year unallowed loss and will be used to figure the allowed loss for 2008.
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Activity B is a rental real estate activity. Its income and expenses are reported on Schedule E. Charles and Lily's records show a loss from operations of $11,600 in 2008. For 2007, they completed the worksheets for Form 8582 and calculated that $8,225 of Activity B's Schedule E loss for 2007 was disallowed by the passive activity rules. That loss is carried over to 2008 as a prior year unallowed loss and will be used to figure the allowed loss for 2008.
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Partnership #1 is a trade or business activity and is not a publicly traded partnership (PTP). Partnership #1 reports a $4,000 distributive share of its 2008 profits to Charles and Lily in box 1 of Schedule K-1 (Form 1065). They report that profit on Schedule E. For 2007, they completed the worksheets for Form 8582 and calculated that $2,600 of their distributive share of the loss from Partnership #1 in 2007 was disallowed by the passive activity rules. That loss is carried over to 2008 as a prior year unallowed loss and will be used to figure the allowed loss for 2008.
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Partnership #2 is a trade or business activity and also a PTP. In December 2008, Charles and Lily sold their entire interest in Partnership #2. To indicate they made an entire disposition of a passive activity, they enter EDPA on the appropriate lines. They do not report that sale on Form 8582 because Partnership #2 is a PTP. They recognize a long-term capital gain of $15,300 ($25,300 selling price minus $10,000 adjusted basis) that they report on Schedule D. The partnership reports a $1,200 distributive share of its 2008 losses to them in box 1 of Schedule K-1 (Form 1065). They report that loss on Schedule E. For 2007, they followed the instructions for Form 8582 and calculated that $2,445 of their distributive share of Partnership #2's 2007 loss was disallowed by the passive activity rules. That loss is carried over from 2007 and reported on Schedule E as a loss for 2008. (For a discussion of PTPs, see the instructions for Form 8582.)
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Partnership #3 is a single trade or business activity and is not a PTP. Charles and Lily's distributive share of partnership losses for 2008 reported in box 1 of Schedule K-1 (Form 1065) is $6,000. Charles and Lily sold their entire interest in Partnership #3 in November 2008. To indicate they made an entire disposition of a passive activity, they enter EDPA on the appropriate lines. They recognize a $4,000 ($15,000 selling price minus $11,000 adjusted basis) long-term capital gain, which they report on Schedule D.
For 2007, they completed the worksheets for Form 8582 and calculated that $3,000 of their distributive share of the partnership's loss for 2007 was disallowed by the passive activity rules. That loss is carried over to 2008 as a prior year unallowed Schedule E loss.
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Partnership #4 is a trade or business activity that is a limited partnership. Charles and Lily are limited partners who did not meet any of the material participation tests. Their distributive share of 2008 partnership loss, reported in box 1 of Schedule K-1 (Form 1065), is $2,400. For 2007, they completed the worksheets for Form 8582 and calculated that $1,500 of their distributive share of loss for 2007 was disallowed by the passive activity rules. That loss is carried over to 2008 as a prior year unallowed loss and will be used to figure the allowed loss for 2008.
For 2008, Charles and Lily complete the forms they usually use to report income or expenses from their activities. They enter their combined wages, $132,000, on Form 1040. They complete Schedule D, line 8, showing long-term capital gains of $15,300 from the disposition of Partnership #2 and $4,000 from the disposition of Partnership #3. Partnership #2 is a PTP so it is not entered on Form 8582. The disposition of Partnership #3 is a disposition of an entire interest in an activity with an overall loss of $5,000 ($4,000 − $3,000 − $6,000) so that partnership also is not entered on Form 8582. They combine the PTP $1,200 current year loss with its $2,445 prior year loss and report the combined amount in column (f) on Schedule E, Part II, line 28. They also combine the Partnership #3 $6,000 current year loss with its $3,000 prior year loss, and enter the combined amount in column (h) on Schedule E, Part II, line 28, since they have an overall loss from that activity. Normally, current year and prior year losses should be entered on separate lines of Schedule E. For purposes of this example only, the amounts have been combined on one line. They enter the $4,000 profit from Partnership #1 in column (g). Before completing the rest of Schedule E, Part II, they must complete Form 8582 to figure out how much of their losses from Partnerships #1 and #4 they can deduct.
They complete Schedule E, Part I, through line 22. Their rental activities are passive so they must complete Form 8582 to figure the deductible losses to enter on line 23.
They enter the gain from the sale of the section 1231 assets of Activity A on Form 4797.
Charles and Lily now complete Form 8582 including the worksheets that apply to their passive activities. Because they are at risk for their investment in the activities, they do not need to complete Form 6198 before Form 8582. (The second part of this publication explains the at-risk rules.)
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They write “Activity A” on the first line under “Name of activity.” Then they enter:
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$2,776 gain in column (a) from Form 4797, line 2, column (g),
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($15,000) loss in column (b) from Schedule E, line 22, column A, and
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($6,667) prior year unallowed loss in column (c) from their 2007 worksheets.
They combine the three amounts. The result, ($18,891), is an overall loss so they enter it in column (e).
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Charles and Lily write “Activity B” on the second line under “Name of activity.” Then they enter:
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($11,600) loss in column (b) from Schedule E, line 22, column B, and
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($8,225) prior year unallowed loss in column (c) from their 2007 worksheets.
Then they combine these two figures and enter the total loss, ($19,825), in column (e).
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They separately add the amounts in columns (a), (b), and (c).
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They enter $2,776 in column (a) on the Total line and also on Form 8582, Part I, line 1a.
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They enter ($26,600) in column (b) on the Total line and also on Form 8582, Part I, line 1b.
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They enter ($14,892) in column (c) on the Total line and also on Form 8582, Part I, line 1c.
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They combine lines 1a, 1b, and 1c, Form 8582, and put the net loss, ($38,716), on line 1d.
Next, Charles and Lily complete Form 8582, Part II, to determine the amount they can deduct for their net losses from real estate activities with active participation (Activities A and B). They enter all amounts as though they were positive (without brackets around losses). They then complete Form 8582, Part IV.
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They enter $38,716 on line 5 since this is the smaller of the loss on line 1d or the loss on line 4.
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They enter $150,000 on line 6 since they are married and filing a joint return.
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They enter $138,655, their modified adjusted gross income, on line 7. (See page 4 for discussion of modified adjusted gross income.) The $138,655 is made up of their wages, $132,000, plus their overall gain of $11,655 from Partnership #2, a PTP, less their $5,000 overall loss from Partnership #3.
On Schedule D, they reported long-term gains of $15,300 from the PTP disposition and $4,000 from the Partnership #3 disposition. On Schedule E, they combined the PTP 2008 loss of $1,200 with its 2007 loss of $2,445, and combined the Partnership #3 2008 loss of $6,000 with its 2007 loss of $3,000. Netting these amounts gives them the PTP overall gain of $11,655 ($15,300 − $1,200 − $2,445) and the Partnership #3 overall loss of $5,000 ($4,000 − $6,000 − $3,000) that were used in figuring modified adjusted gross income. -
They subtract line 7 from line 6 and enter the result, $11,345, on line 8.
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They multiply line 8 by 50% and enter the result, $5,673, on line 9.
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They enter the smaller of line 5 or line 9, $5,673, on line 10.
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They add the income on lines 1a and 3a and enter the result, $6,776, on line 15.
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They add lines 10 and 15 and enter the result, $12,449, on line 16.
Charles and Lily must complete Worksheet 4 because they entered an amount on Form 8582, line 10, and have two activities, each with an overall loss in Worksheet 1, column (e). Worksheet 4 allocates the amount on line 10 (their special allowance for active participation rental real estate activities) between Activity A and Activity B.
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In the two left columns, they write the name of each activity, A and B, and the schedule and line number on which each activity is reported.
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They fill in column (a) with the losses from Worksheet 1, column (e). They add up the amounts, and enter the result, $38,716, in the Total line without brackets.
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They figure the ratios for column (b) by dividing each amount in column (a) by the amount on the column (a) Total line. They enter each result in column (b). The total of the ratios must equal 1.00.
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They multiply the amount from line 10, Form 8582, $5,673, by each of the ratios in Worksheet 4, column (b) and enter the results on the appropriate line in column (c). The total must equal $5,673.
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They subtract column (c) from column (a) and enter each result in column (d).
Worksheet 5 must be completed if any activity has an overall loss in Worksheet 3, column (e), or a loss in Worksheet 4, column (d) (or Worksheet 1, column (e), if Worksheet 4 was not needed). This worksheet allocates the unallowed loss among the activities with an overall loss. Charles and Lily complete Worksheet 5 with the activities from Worksheet 4 and the one activity showing a loss in Worksheet 3, column (e). They write the name of each activity and the schedule or form and the line number on which each loss will be reported in the two left columns of Worksheet 5.
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In column (a), they enter the losses from Worksheet 3, column (e) and Worksheet 4, column (d). These losses are entered as positive numbers, not in brackets. They add the numbers and enter the total, $36,943, on the Total line.
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They divide each of the losses in column (a) by the amount on the column (a) Total line, and enter each result in column (b). The ratios must total 1.00.
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Now they use the computation worksheet for column (c) (see the worksheet in the instructions for Form 8582) to figure the unallowed loss to allocate in column (c).
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On line A of the computation worksheet, they enter the amount from line 4 of Form 8582, $41,216, as a positive number.
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On line B, they enter the amount from line 10 of Form 8582, $5,673.
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They subtract line B from line A and enter the result, $35,543, on line C. This is the total unallowed loss.
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They multiply line C, $35,543, by each of the ratios in column (b) and enter the results in column (c). These amounts are the unallowed losses from each activity and must add up to $35,543.
Charles and Lily now decide whether they must use Worksheet 6, Worksheet 7, or both to figure their allowed losses. If the loss from any activity entered on Worksheet 5 is reported on only one form or schedule, then Worksheet 6 is used for that activity. If an activity has a loss that is reported on two or more schedules or forms (for example, a loss that must be reported partly on Schedule C and partly on Form 4797), Worksheet 7 is used for that activity. All of the activities Charles and Lily entered on Worksheet 5 will be reported on Schedule E. Therefore, they use Worksheet 6 to figure the allowed loss for each activity.
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They write the name of each activity and the schedule and line number to be used in the two left columns of Worksheet 6.
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In column (a), they enter the total loss for each activity. This includes the current year loss plus the prior year unallowed loss. They find these amounts by adding columns (b) and (c) on Worksheets 1 and 3.
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In column (b), they enter the unallowed loss for each activity already figured in Worksheet 5, column (c). They must save this information to use next year in figuring their passive losses.
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In column (c), they figure their allowed losses for 2008 by subtracting their unallowed losses, column (b), from their total losses, column (a). These allowed losses are entered on the appropriate schedules.
Charles and Lily summarize the entries on Schedule E, Schedule D, and Form 4797, and enter the amounts on the appropriate lines of their Form 1040. They enter:
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The total Schedule D gain, $22,076, on line 13, and
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The Schedule E loss, ($21,094), on line 17.
Charles and Lily are now able to complete their tax return, having correctly limited their losses from their passive activities.
The at-risk rules limit your losses from most activities to your amount at risk in the activity. You treat any loss that is disallowed because of the at-risk limits as a deduction from the same activity in the next tax year. If your losses from an at-risk activity are allowed, they are subject to recapture in later years if your amount at risk is reduced below zero.
You must apply the at-risk rules before the passive activity rules discussed in the first part of this publication.-
You must file Form 6198 with your tax return if:
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You have a loss from any part of an activity that is covered by the at-risk rules, and
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You are not at risk for some of your investment in the activity.
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You must file Form 6198 if you are engaged in an activity included in (6) under Activities Covered by the At-Risk Rules and you have borrowed amounts described in Certain borrowed amounts excluded under At-Risk Amounts, later.
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The adjusted basis of:
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The partner's partnership interest, or
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The shareholder's stock plus any loans the shareholder makes to the corporation,
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The at-risk rules, and
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The passive activity rules.
The at-risk limits apply to individuals (including partners and S corporation shareholders), estates, trusts, and certain closely held corporations (other than S corporations).
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Stock owned directly or indirectly by or for a corporation, partnership, estate, or trust is considered owned proportionately by its shareholders, partners, or beneficiaries.
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An individual is considered to own the stock owned directly or indirectly by or for his or her family. Family includes only brothers and sisters (including half-brothers and half-sisters), a spouse, ancestors, and lineal descendants.
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If a person holds an option to buy stock, he or she is considered to be the owner of that stock.
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When applying rule (1) or (2), stock considered owned by a person under rule (1) or (3) is treated as actually owned by that person. Stock considered owned by an individual under rule (2) is not treated as owned by the individual for again applying rule (2) to consider another the owner of that stock.
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Stock that may be considered owned by an individual under either rule (2) or (3) is considered owned by the individual under rule (3).
If you are involved in one of the following activities as a trade or business or for the production of income, you are subject to the at-risk rules.
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Holding, producing, or distributing motion picture films or video tapes.
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Farming.
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Leasing section 1245 property, including personal property and certain other tangible property that is depreciable or amortizable. See Section 1245 property, next.
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Exploring for, or exploiting, oil and gas.
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Exploring for, or exploiting, geothermal deposits (for wells started after September 1978).
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Any other activity not included in (1) through (5) that is carried on as a trade or business or for the production of income.
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Personal property,
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Other tangible property (other than a building or its structural components) that is:
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Used in manufacturing, production, extraction or furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services,
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A research facility used for the activities in (a), or
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A facility used in any of the activities in (a) for the bulk storage of fungible commodities,
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Real property (other than property described in (2)) with an adjusted basis that was reduced by certain amortization deductions listed in section 1245(a)(3)(C) of the Internal Revenue Code,
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A single purpose agricultural or horticultural structure, or
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A storage facility (other than a building or its structural components) used for the distribution of petroleum.
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A personal holding company, or
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A personal service corporation (defined in section 269A(b) of the Internal Revenue Code, but determined by substituting 5% for 10%).
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During the entire 12-month period ending on the last day of the tax year, the corporation had at least:
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One full-time employee whose services were in the active management of the business, and
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Three full-time nonowner employees whose services were directly related to the business. A nonowner employee is an employee who does not own more than 5% in value of the outstanding stock of the corporation at any time during the tax year. (The rules for constructive ownership of stock in section 318 of the Internal Revenue Code apply. However, in applying these rules, an owner of 5% or more, rather than 50% or more, of the value of a corporation's stock is considered to own a proportionate share of any stock owned by the corporation.)
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Deductions due to the business that are allowable to the corporation as business expenses and as contributions to certain employee benefit plans for the tax year exceed 15% of the gross income from the business.
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The business is not an excluded business. Generally, an excluded business means equipment leasing as defined, earlier, under Exception for equipment leasing by a closely held corporation, and any business involving the use, exploitation, sale, lease, or other disposition of master sound recordings, motion picture films, video tapes, or tangible or intangible assets associated with literary, artistic, musical, or similar properties.
Generally, you treat your activity involving each film or video tape, item of leased section 1245 property, farm, oil and gas property, or geothermal property as a separate activity. In addition, each investment that is not a part of a trade or business is treated as a separate activity.
Activities described in (6) under Activities Covered by the At-Risk Rules, earlier, that constitute a trade or business are treated as one activity if:
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You actively participate in the management of the trade or business, or
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The trade or business is carried on by a partnership or S corporation and 65% or more of its losses for the tax year are allocable to persons who actively participate in the management of the trade or business.
Similar rules apply to activities described in (1) through (5) of that earlier discussion.
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Films and video tapes,
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Farms,
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Oil and gas properties, and
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Geothermal properties.
You are at risk in any activity for:
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The money and adjusted basis of property you contribute to the activity, and
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Amounts you borrow for use in the activity if:
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You are personally liable for repayment, or
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You pledge property (other than property used in the activity) as security for the loan.
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Amounts borrowed by a corporation from a person whose only interest in the activity is as a shareholder of the corporation,
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Amounts borrowed from a person having an interest in the activity as a creditor, or
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Amounts borrowed after May 3, 2004, secured by real property used in the activity of holding real property (other than mineral property) that, if nonrecourse, would be qualified nonrecourse financing.
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Members of a family, but only an individual's brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.),
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Two corporations that are members of the same controlled group of corporations determined by applying a 10% ownership test,
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The fiduciaries of two different trusts, or the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts,
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A tax-exempt educational or charitable organization and a person who directly or indirectly controls it (or a member of whose family controls it),
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A corporation and an individual who owns directly or indirectly more than 10% of the value of the outstanding stock of the corporation,
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A trust fiduciary and a corporation of which more than 10% in value of the outstanding stock is owned directly or indirectly by or for the trust or by or for the grantor of the trust,
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The grantor and fiduciary, or the fiduciary and beneficiary, of any trust,
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A corporation and a partnership if the same persons own more than 10% in value of the outstanding stock of the corporation and more than 10% of the capital interest or the profits interest in the partnership,
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Two S corporations if the same persons own more than 10% in value of the outstanding stock of each corporation,
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An S corporation and a regular corporation if the same persons own more than 10% in value of the outstanding stock of each corporation,
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A partnership and a person who owns directly or indirectly more than 10% of the capital or profits of the partnership,
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Two partnerships if the same persons directly or indirectly own more than 10% of the capital or profits of each,
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Two persons who are engaged in business under common control, and
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An executor of an estate and a beneficiary of that estate.
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Stock owned directly or indirectly by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries.
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Stock owned directly or indirectly by or for an individual's family is considered owned by the individual. The family of an individual includes only brothers and sisters, half-brothers and half-sisters, a spouse, ancestors, and lineal descendants.
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Any stock in a corporation owned by an individual (other than by applying rule (2)) is considered owned directly or indirectly by the individual's partner.
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When applying rule (1), (2), or (3), stock considered owned by a person under rule (1) is treated as actually owned by that person. But, if a person constructively owns stock because of rule (2) or (3), he or she does not own the stock for purposes of applying either rule (2) or (3) to make another person the constructive owner of the same stock.
You are not considered at risk for amounts protected against loss through nonrecourse financing, guarantees, stop loss agreements, or other similar arrangements.
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Borrowed by you in connection with the activity of holding real property,
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Secured by real property used in the activity,
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Not convertible from a debt obligation to an ownership interest, and
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Loaned or guaranteed by any federal, state, or local government, or borrowed by you from a qualified person.
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A person related to you in one of the ways listed under Related persons, earlier. However, a person related to you may be a qualified person if the nonrecourse financing is commercially reasonable and on the same terms as loans involving unrelated persons.
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A person from which you acquired the property or a person related to that person.
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A person who receives a fee due to your investment in the real property or a person related to that person.
Example 1.
Some commercial feedlots reimburse investors against any loss sustained on sales of the fed livestock above a stated dollar amount per head. Under such stop loss orders, the investor is at risk only for the portion of the investor's capital for which the investor is not entitled to a reimbursement.
Example 2.
You are personally liable for a mortgage, but you separately obtain insurance to compensate you for any payments you must actually make because of your personal liability. You are considered at risk only to the extent of the uninsured portion of the personal liability to which you are exposed. You can include in the amount you have at risk the amount of any premium which you paid from your personal assets for the insurance. However, if you obtain casualty insurance or insurance protecting yourself against tort liability, it does not affect the amount you are otherwise considered to have at risk.
The amount you have at risk in any activity is reduced by any losses allowed in previous years under the at-risk rules. It may also be reduced because of distributions you received from the activity, debts changed from recourse to nonrecourse, or the initiation of a stop loss or similar agreement. If the amount at risk is reduced below zero, your previously allowed losses are subject to recapture, as explained next.
If the amount you have at risk in any activity at the end of any tax year is less than zero, you must recapture at least part of your previously allowed losses. You do this by adding to your income from the activity for that year the lesser of the following amounts:
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The negative at-risk amount (treated as a positive amount), or
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The total amount of losses deducted in previous tax years beginning after 1978, minus any amounts you previously added to your income from that activity under this recapture rule.
Do not use the recapture income to reduce any net loss from the activity for the tax year. Instead, treat the recaptured amount as a deduction for the activity in the next tax year.
You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. By selecting the method that is best for you, you will have quick and easy access to tax help.
www.aarp.org/money/taxaide. For more information on these programs, go to www.irs.gov and enter keyword “VITA” in the upper right-hand corner.
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E-file your return. Find out about commercial tax preparation and e-file services available free to eligible taxpayers.
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Check the status of your 2008 refund. Go to www.irs.gov and click on Where's My Refund. Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Have your 2008 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund.
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Download forms, instructions, and publications.
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Order IRS products online.
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Research your tax questions online.
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Search publications online by topic or keyword.
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View Internal Revenue Bulletins (IRBs) published in the last few years.
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Figure your withholding allowances using the withholding calculator online at
www.irs.gov/individuals. -
Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant.
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Sign up to receive local and national tax news by email.
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Get information on starting and operating a small business.
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Ordering forms, instructions, and publications. Call 1-800-829-3676 to order current-year forms, instructions, and publications, and prior-year forms and instructions. You should receive your order within 10 days.
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Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040.
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Solving problems. You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Call your local Taxpayer Assistance Center for an appointment. To find the number, go to
www.irs.gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. -
TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications.
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TeleTax topics. Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics.
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Refund information. To check the status of your 2008 refund, call 1-800-829-1954 during business hours or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Have your 2008 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Refunds are sent out weekly on Fridays. If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back.
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Other refund information. To check the status of a prior year refund or amended return refund, call 1-800-829-1954.
Evaluating the quality of our telephone services. To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. One method is for a second IRS representative to listen in on or record random telephone calls. Another is to ask some callers to complete a short survey at the end of the call.
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Products. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.
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Services. You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. No appointment is necessary—just walk in. If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. All other issues will be handled without an appointment. To find the number of your local office, go to www.irs.gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service.
Mail. You can send your order for forms, instructions, and publications to the address below. You should receive a response within 10 days after your request is received.
Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613
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Current-year forms, instructions, and publications.
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Prior-year forms, instructions, and publications.
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Tax Map: an electronic research tool and finding aid.
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Tax law frequently asked questions.
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Tax Topics from the IRS telephone response system.
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Internal Revenue Code—Title 26 of the U.S. Code.
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Fill-in, print, and save features for most tax forms.
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Internal Revenue Bulletins.
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Toll-free and email technical support.
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Two releases during the year.
– The first release will ship the beginning of January 2009.
– The final release will ship the beginning of March 2009.
www.irs.gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). The price is discounted to $25 for orders placed prior to December 1, 2008. Small Business Resource Guide 2009. This online guide is a must for every small business owner or any taxpayer about to start a business. This year's guide includes:
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Helpful information, such as how to prepare a business plan, find financing for your business, and much more.
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All the business tax forms, instructions, and publications needed to successfully manage a business.
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Tax law changes for 2009.
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Tax Map: an electronic research tool and finding aid.
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Web links to various government agencies, business associations, and IRS organizations.
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“Rate the Product” survey—your opportunity to suggest changes for future editions.
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A site map of the guide to help you navigate the pages with ease.
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An interactive “Teens in Biz” module that gives practical tips for teens about starting their own business, creating a business plan, and filing taxes.
More Online Publications |