Publication 925: Passive Activity and At-Risk Rules;

This is archived information that pertains only to the 2004 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Form 8582 Passive Activity Loss Limitations 2004. Summary: This is an example of Form 8582 (2004) with items included as described in the text. Additionally, these line items are completed:

“Name(s) shown on return” field contains Charles and Lily Woods

“Identifying number” field contains 123-00-4567

Under “Part I: 2004 Passive Activity Loss: Rental Real Estate Activities With Active Participation”:

“1a. Activities with net income (enter the amount from Worksheet 1, column (a))” field contains 2,776

“1b. Activities with net loss (enter the amount from Worksheet 1, column (b))” field contains negative 26,600

“1c. Prior years unallowed losses (enter the amount from Worksheet 1, column (c))” field contains negative 14,892

“1d. Combine lines 1a, 1b, and 1c” field contains negative 38,716

Under “Part I: 2004 Passive Activity Loss: All Other Passive Activities”:

“3a. Activities with net income (enter the amount from Worksheet 3, column (a))” field contains 4,000

“3b. Activities with net loss (enter the amount from Worksheet 3, column (b))” field contains negative 2,400

“3c. Prior years unallowed losses (enter the amount from Worksheet 3, column (c))” field contains negative 4,100

“3d. Combine lines 3a, 3b, and 3c” field contains negative 2,500

“4. Combine lines 1d, 2c, and 3d. If the result is net income or zero, all losses are allowed, including any prior year unallowed losses entered on line 1c, 2b, or 3c. Do not complete Form 8582. Report the losses on the forms and schedules normally used” field contains negative 41,216

Under “Part II: Special Allowance for Rental Real Estate With Active Participation”:

“5. Enter the smaller of the loss on line 1d or the loss on line 4” field contains 38,716

“6. Enter $150,000. If married filing separately, see page 8” field contains 150,000

“7. Enter modified adjusted gross income, but not less than zero (see page 8)” field contains 138,655

“8. Subtract line 7 from line 6” field contains 11,345

“9. Multiply line 8 by 50% (.5). Do not enter more than $25,000. If married filing separately, see page 8” field contains 5,673

“10. Enter the smaller of line 5 or line 9” field contains 5,673

Under “Part IV: Total Losses Allowed”:

“15. Add the income, if any, on lines 1a and 3a and enter the total” field contains 6,776

“16. Total losses allowed from all passive activities for 2004. Add line 10, 14, and 15. See pages 10 and 11 of the instructions to find out how to report the losses on your tax return” field contains 12,449