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Form 8582-CR Instructions

Instructions for Form 8582-CR, Passive Activity Credit Limitations

Rev. December 2019

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Department of the Treasury  
Internal Revenue Service  
Instructions for Form  
8582-CR  
(Rev. December 2019)  
Passive Activity Credit Limitations  
Section references are to the Internal  
Revenue Code unless otherwise noted.  
following credits from passive  
activities.  
If you are married filing jointly, one  
spouse must separately meet both 2a  
and 2b without taking into account  
services performed by the other  
spouse.  
General business credits.  
General Instructions  
Qualified plug-in electric and  
electric vehicle credit.  
Future Developments  
A real property trade or business is  
any real property development,  
redevelopment, construction,  
reconstruction, acquisition,  
Overview of Form  
For the latest developments related to  
Form 8582-CR and its instructions,  
such as legislation enacted after they  
were published, go to IRS.gov/  
The form contains six parts. The  
Specific Instructions include, at the  
beginning of the instructions for each  
part, a brief explanation of the  
purpose or use of that part. These  
explanations give a general overview  
of how the form works.  
conversion, rental, operation,  
management, leasing, or brokerage  
trade or business.  
Purpose of Form  
Services you performed as an  
employee aren’t treated as performed  
in a real property trade or business  
unless you owned more than 5% of  
the stock (or more than 5% of the  
capital or profits interest) in the  
employer.  
3. A working interest in an oil or  
gas well. Your working interest must  
be held directly or through an entity  
that doesn’t limit your liability (such as  
a general partner interest in a  
partnership). In this case, it doesn’t  
matter whether you materially  
participated in the activity for the tax  
year.  
Form 8582-CR is used by  
noncorporate taxpayers to figure the  
amount of any passive activity credit  
(PAC) for the current tax year  
Also, as you read the instructions  
that follow, see Example of How To  
example goes through a six-step  
analysis of how the form and  
(including any prior year unallowed  
credits) and the amount of credit  
allowed for the current year. It is also  
used to make the election to increase  
the basis of credit property when a  
taxpayer disposes of his or her  
interest in an activity.  
worksheets are completed for a  
partner in a limited partnership that  
has a low-income housing credit.  
Activities That Aren’t  
Passive Activities  
PACs that aren’t allowed in the  
current year are carried forward until  
they are allowed against the tax on  
either net passive income or the  
special allowance, if applicable.  
The following aren’t passive activities.  
1. Trade or business activities in  
which you materially participated for  
the tax year.  
2. Any rental real estate activity in  
which you materially participated if  
you were a “real estate professional”  
for the tax year. You were a real  
estate professional only if:  
a. More than half of the personal  
services you performed in trades or  
businesses during the tax year were  
performed in real property trades or  
businesses in which you materially  
participated, and  
b. You performed more than 750  
hours of services during the tax year  
in real property trades or businesses  
in which you materially participated.  
If, however, your liability was  
limited for part of the year (for  
Different rules apply to your  
activities and the related credit,  
depending on the type of activity.  
Generally, passive activities include:  
example, you converted your general  
partner interest to a limited partner  
interest during the year), some of your  
income and losses 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).  
Trade or business activities in  
which you didn’t materially participate  
for the tax year.  
Rental activities, regardless of your  
participation.  
4. The rental of a dwelling unit you  
used as a residence if section 280A(c)  
(5) applies. This section applies if you  
rented out a dwelling unit that you also  
used as a home during the year for a  
number of days that exceeds the  
and Rental Activities, later.  
For more information, see Pub.  
925, Passive Activity and At-Risk  
Rules.  
greater of 14 days or 10% of the  
Note. Corporations subject to the  
passive activity rules must use Form  
8810, Corporate Passive Activity Loss  
and Credit Limitations.  
number of days during the year that  
the home was rented at a fair rental.  
For purposes of item 2, each  
interest in rental real estate is a  
separate activity unless you elect to  
treat all interests in rental real estate  
as one activity. See Regulations  
section 1.469–9(g)(3) for details.  
5. An activity of trading personal  
property for the account of owners of  
interests in the activity. For purposes  
of this rule, personal property means  
property that is actively traded, such  
Who Must File  
Form 8582-CR is filed by individuals,  
estates, and trusts with any of the  
Jan 29, 2020  
Cat. No. 64649B  
 
as stocks, bonds, and other  
securities. See Temporary  
Significant personal services  
corporation, or joint venture in your  
capacity as an owner of an interest in  
the partnership, S corporation, or joint  
venture.  
include only services performed by  
individuals. To determine if personal  
services are significant, all relevant  
facts and circumstances are  
Regulations section 1.469-1T(e)(6).  
Generally, credits from these  
activities aren’t entered on Form  
8582-CR. However, credits from  
these activities may be subject to  
limitations other than the passive  
credit limitation rules.  
Reporting Credits  
From the Activities  
If an activity meets any of the five  
exceptions listed above, it isn’t a  
rental activity. You must then  
determine:  
1. Whether your rental of the  
property is a trade or business activity  
later); and, if so,  
considered. Facts and circumstances  
include 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.  
2. Extraordinary personal services  
were provided in making the rental  
property available for customer use.  
This applies only if the services are  
performed by individuals and the  
customers' use of the rental property  
is incidental to their receipt of the  
services.  
Rental Activities  
A rental activity is a passive activity  
even if you materially participated in  
the activity (unless it’s a rental real  
estate activity in which you materially  
participated and you were a real  
estate professional).  
2. Whether you materially  
participated in the activity for the tax  
year (see Material Participation, later).  
However, if you meet any of the  
five exceptions listed below, the rental  
of the property isn’t treated as a rental  
the Activities, later, if you meet any of  
the exceptions.  
If the activity is a trade or business  
3. Rental of the property is  
activity in which you didn’t materially  
participate, enter the credits from the  
activity on Worksheet 4, later.  
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 is less than 2% of  
the smaller of the unadjusted basis or  
the fair market value (FMV) of the  
property.  
If the activity is a trade or business  
activity in which you did materially  
participate, report the credits from the  
activity on the forms you normally use.  
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 doesn’t matter whether the  
use is under a lease, a service  
If the rental activity didn’t meet any  
of the five exceptions, it is generally a  
passive activity. Special rules apply if  
you conduct the rental activity through  
a publicly traded partnership (PTP).  
(PTPs), later.  
Unadjusted basis is the cost of the  
property without regard to  
depreciation deductions or any other  
basis adjustment described in section  
1016.  
contract, or some other arrangement.  
If the rental activity isn’t conducted  
through a PTP, the passive rental  
activity is entered in Worksheet 1, 2,  
3, or 4.  
Exceptions  
The rental of property is incidental  
An activity isn’t a rental activity if any  
to a trade or business activity if:  
of the following exceptions are met.  
a. You own an interest in the trade  
or business activity during the tax  
year,  
b. The rental property was mainly  
used in the trade or business activity  
during the tax year or during at least 2  
of the 5 preceding tax years, and  
c. The gross rental income from  
the property is less than 2% of the  
smaller of the unadjusted basis or the  
FMV of the property.  
1. The average period of customer  
use is:  
Worksheet 1 is for credits (other  
than rehabilitation credits and  
low-income housing credits) from  
passive rental real estate activities in  
which you actively participated. See  
a. 7 days or less, or  
b. 30 days or less and significant  
personal services were provided in  
making the rental property available  
for customer use.  
Worksheet 2 is for rehabilitation  
credits from passive rental real estate  
activities and low-income housing  
credits for property placed in service  
before 1990. This worksheet is also  
used for low-income housing credits  
from a partnership, S corporation, or  
other pass-through entity if your  
interest in the pass-through entity was  
acquired before 1990, regardless of  
the date the property was placed in  
service.  
Figure the average period of  
customer use for a class of property  
by dividing the total number of days in  
all rental periods by the number of  
rentals during the tax year. If the  
Lodging provided for the  
employer's convenience to an  
activity involves renting more than one employee or the employee's spouse  
class of property, multiply the average or dependents is incidental to the  
period of customer use of each class  
by the ratio of the gross rental income  
from that class to the activity's total  
gross rental income. The activity's  
average period of customer use  
equals the sum of these  
activity or activities in which the  
employee performs services.  
4. You customarily make the rental  
property available during defined  
business hours for nonexclusive use  
by various customers.  
Worksheet 3 is for low-income  
housing credits for property placed in  
service after 1989 (unless held  
class-by-class average periods  
weighted by gross income. See  
Regulations section 1.469-1(e)(3)(iii).  
5. You provide property for use in  
a nonrental activity of a partnership, S  
through a pass-through entity in which  
Instructions for Form 8582-CR (Rev. 12-2019)  
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you acquired your interest before  
1990).  
activities. The election must be made  
by both the executor (if any) of the  
decedent's estate and the trustee of  
the revocable trust. For details, see  
Regulations section 1.645-1.  
You aren’t considered to actively  
participate in a rental real estate  
activity if at any time during the tax  
year your interest (including your  
spouse's interest) in the activity was  
less than 10% (by value) of all  
interests in the activity.  
($75,000 or more if married filing  
separately), there is no special  
allowance.  
Worksheet 4 is for credits from  
passive trade or business activities in  
which you didn’t materially participate  
and passive rental real estate  
activities in which you didn’t actively  
participate (but not rehabilitation  
credits from passive rental real estate  
activities or low-income housing  
credits).  
However, for low-income housing  
credits for property placed in service  
before 1990 and for rehabilitation  
credits, the limits on modified  
adjusted gross income are increased.  
If your modified adjusted gross  
income is more than $200,000  
($100,000 if married filing separately)  
but less than $250,000 ($125,000 if  
married filing separately), your special  
allowance is limited to 50% of the  
difference between $250,000  
Special Allowance for  
Rental Real Estate Activities  
Active participation is a less  
stringent requirement than material  
participation (see Material  
If you actively participated in a  
passive rental real estate activity, you  
may be able to claim credits from the  
activity for the tax attributable to a  
special allowance of up to $25,000,  
reduced by any passive losses,  
including the commercial revitalization  
deduction, allowed under this  
Participation, later). You may be  
treated as actively participating if, for  
example, you participated in making  
management decisions or arranging  
for others to provide services (such as  
repairs) in a significant and bona fide  
sense. Management decisions that  
may count as active participation  
include:  
($125,000 if married filing separately)  
and your modified adjusted gross  
income.  
If your modified adjusted gross  
income is $250,000 or more  
($125,000 or more if married filing  
separately), there is no special  
allowance.  
exception on Form 8582, Passive  
Activity Loss Limitations.  
Approving new tenants,  
Deciding on rental terms,  
Approving capital or repair  
No modified adjusted gross income  
limitation applies when figuring the  
special allowance for low-income  
housing credits for property placed in  
service after 1989 (other than from a  
pass-through entity in which you  
acquired your interest before 1990).  
The special allowance also applies  
to low-income housing credits and  
rehabilitation credits from a rental real  
estate activity, even if you didn’t  
actively participate in the activity. The  
credits allowed under the special  
allowance are in addition to the  
credits allowed for the tax attributable  
to net passive income.  
expenditures, and  
Other similar decisions.  
The maximum special allowance is:  
$25,000 for single individuals and  
married individuals filing a joint return  
for the tax year.  
Trade or Business  
Activities  
$12,500 for married individuals who  
The special allowance isn’t  
file separate returns for the tax year  
and who lived apart from their  
spouses at all times during the tax  
year.  
A trade or business activity is an  
activity (other than a rental activity or  
an activity treated as incidental to an  
activity of holding property for  
investment) that:  
available if you were married at the  
end of the year, are filing a separate  
return for the year, and lived with your  
spouse at any time during the year.  
$25,000 for a qualifying estate  
reduced by the special allowance for  
which the surviving spouse qualified.  
Only an individual, a qualifying  
estate, or a qualified revocable trust  
that made an election to treat the trust  
as part of the decedent's estate may  
actively participate in a rental real  
estate activity. Unless future  
1. Involves the conduct of a trade  
or business (within the meaning of  
section 162),  
Modified adjusted gross income  
limitation. If your modified adjusted  
gross income (defined in the  
2. Is conducted in anticipation of  
starting a trade or business, or  
instructions, later) is $100,000 or less  
($50,000 or less if married filing  
separately), figure your credits based  
on the amount of the maximum  
special allowance referred to in the  
preceding paragraph.  
regulations provide an exception,  
limited partners aren’t treated as  
actively participating in a partnership's  
rental real estate activity.  
A qualifying estate is the estate of a  
decedent for tax years ending less  
than 2 years after the date of the  
decedent's death if the decedent  
would have satisfied the active  
participation requirements for the  
rental real estate activity for the tax  
year the decedent died.  
3. Involves research or  
experimental expenditures deductible  
under section 174 (or that would be if  
you chose to deduct rather than  
capitalize them).  
If your modified adjusted gross  
income is more than $100,000  
($50,000 if married filing separately)  
but less than $150,000 ($75,000 if  
married filing separately), your special  
allowance is limited to 50% of the  
difference between $150,000  
($75,000 if married filing separately)  
and your modified adjusted gross  
income.  
Reporting Credits  
From the Activities  
Trade or business activities with  
material participation. If you  
materially participated in a trade or  
business activity, the activity isn’t a  
passive activity. Report the credits  
from the activity on the forms you  
normally use.  
A qualified revocable trust may  
elect to be treated as part of a  
decedent's estate for purposes of the  
special allowance for active  
Generally, if your modified adjusted Trade or business activities with-  
participation in rental real estate  
gross income is $150,000 or more out material participation. If you  
Instructions for Form 8582-CR (Rev. 12-2019)  
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didn’t materially participate in a trade  
or business activity, the activity is a  
passive activity. Generally, you must  
use Worksheet 4, later, to figure the  
amount to enter on Form 8582-CR for  
each trade or business activity in  
which you didn’t materially participate.  
However, if you held the activity  
through a PTP, special rules apply.  
(PTPs), later.  
any interest in the activity) for the  
year.  
4. The activity is a significant  
participation activity for the tax year,  
and you participated in all significant  
participation activities during the year  
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 didn’t materially participate under  
any of the material participation tests  
(other than this fourth test).  
5. You materially participated in  
the activity for any 5 (whether or not  
consecutive) of the 10 immediately  
preceding tax years.  
the activity and whether or not you  
and your spouse file a joint return for  
the tax year.  
Test for investors. Work done as an  
investor in an activity isn’t treated as  
participation unless you were directly  
involved in the day-to-day  
management or operations of the  
activity. For purposes of this test, work  
done as an investor includes:  
1. Studying and reviewing  
financial statements or reports on  
operations of the activity,  
2. Preparing or compiling  
summaries or analyses of the  
finances or operations of the activity  
for your own use, and  
3. Monitoring the finances or  
operations of the activity in a  
nonmanagerial capacity.  
Material Participation  
For the material participation tests that  
follow, participation generally includes  
any work done in connection with an  
activity if you owned an interest in the  
activity at the time you did the work.  
The capacity in which you did the  
work doesn’t matter. However, work  
isn’t participation if:  
6. The activity is a personal  
service activity in which you materially  
participated for any 3 (whether or not  
consecutive) preceding tax years.  
It isn’t work that an owner would  
Special rules for limited partners.  
If you were a limited partner in an  
activity, you generally didn’t materially  
participate in the activity. You did  
materially participate in the activity,  
however, if you met material  
customarily do in the same type of  
activity, and  
An activity is a personal service  
activity if it involves the performance  
of personal services in the fields of  
health, law, engineering, architecture,  
accounting, actuarial science,  
performing arts, consulting, or in any  
other trade or business in which  
capital isn’t a material income-  
producing factor.  
One of your main reasons for doing  
the work was to avoid the  
disallowance of losses or credits from  
the activity under the passive activity  
rules.  
participation test 1, 5, or 6 (see Tests  
for individuals , earlier) for the tax  
year.  
However, for purposes of the  
material participation tests, you aren’t  
treated as a limited partner if you also  
were a general partner in the  
Proof of participation. You may  
prove your participation in an activity  
by any reasonable means. You don’t  
have to maintain contemporaneous  
daily time reports, logs, or similar  
documents if you can establish your  
participation by other reasonable  
means. For this purpose, reasonable  
means include, but aren’t limited to,  
identifying services performed over a  
period of time and the approximate  
number of hours spent performing the  
services during that period, based on  
appointment books, calendars, or  
narrative summaries.  
7. Based on all the facts and  
circumstances, you participated in the  
activity on a regular, continuous, and  
substantial basis during the tax year.  
partnership at all times during the  
partnership's tax year ending with or  
within your tax year (or, if shorter,  
during the portion of the partnership's  
tax year in which you directly or  
indirectly owned your limited partner  
interest).  
A limited partner's share of an  
electing large partnership's taxable  
income or loss from all trade or  
business and rental activities is  
treated as income or loss from the  
conduct of a single passive trade or  
business activity.  
Special rules for certain retired or  
disabled farmers and surviving  
spouses of farmers. Certain retired  
or disabled farmers and surviving  
spouses of farmers are treated as  
materially participating in a farming  
activity if the real property used in the  
activity meets the estate tax rules for  
special valuation of farm property  
passed from a qualifying decedent.  
See Temporary Regulations section  
1.469-5T(h)(2).  
You didn’t materially participate in  
the activity under this seventh test,  
however, if you participated in the  
activity for 100 hours or less during  
the tax year.  
Your participation in managing the  
activity doesn’t count in determining  
whether you materially participated  
under this test if:  
a. Any person (except you)  
received compensation for performing  
services in the management of the  
activity, or  
Tests for individuals. You materially  
participated for the tax year in an  
activity if you satisfy at least one of the  
following tests.  
1. You participated in the activity  
for more than 500 hours.  
b. Any individual spent more hours  
during the tax year performing  
services in the management of the  
activity than you did (regardless of  
whether the individual was  
2. Your participation in the activity  
for the tax year was substantially all of  
the participation in the activity of all  
individuals (including individuals who  
didn’t own any interest in the activity)  
for the year.  
compensated for the management  
services).  
3. 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  
Test for a spouse. Participation by  
your spouse during the tax year in an  
activity you own may be counted as  
your participation in the activity, even  
if your spouse didn’t own an interest in  
(including individuals who didn’t own  
Instructions for Form 8582-CR (Rev. 12-2019)  
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Estates and trusts. The PAC  
Regrouping due to net investment  
Partial disposition of an activity.  
limitations apply to an estate or trust.  
See Temporary Regulations sections  
1.469-1T(b)(2) and (3). The rules for  
determining material participation for  
this purpose haven’t yet been issued.  
income tax. You may be able to  
You may treat the disposition of  
regroup your activities if you’re subject substantially all of an activity as a  
to the Net Investment Income Tax  
(NIIT) for the first time. For detailed  
information, see Pub. 925 and  
Regulations section 1.469-11(b)(3)  
(iv).  
separate activity if you can prove with  
reasonable certainty:  
1. The prior year unallowed  
losses, if any, allocable to the part of  
the activity disposed of; and  
2. The net income or loss for the  
year of disposition allocable to the  
part of the activity disposed of.  
Grouping of Activities  
Generally, one or more trade or  
business activities or rental activities  
may be treated as a single activity if  
the activities make up an appropriate  
economic unit for the measurement of  
gain or loss under the passive activity  
rules.  
Limitation on grouping certain ac-  
tivities. The following activities may  
not be grouped together.  
1. A rental activity with a trade or  
business activity unless the activities  
being grouped together make up an  
appropriate economic unit and:  
Disclosure Requirement  
For tax years beginning after January  
24, 2010, the following disclosure  
requirements for groupings apply. You  
are required to report certain changes  
to your groupings that occur during  
the tax year to the IRS. If you fail to  
report these changes, each trade or  
business activity or rental activity will  
be treated as a separate activity. You  
will be considered to have made a  
timely disclosure if you filed all  
Whether activities make up an  
appropriate economic unit depends  
on all the relevant facts and  
a. The rental activity is  
insubstantial relative to the trade or  
business activity or vice versa, or  
circumstances. The factors given the  
greatest weight in determining  
whether activities make up an  
appropriate economic unit are:  
b. Each owner of the trade or  
business activity has the same  
proportionate ownership interest in  
the rental activity. If so, the portion of  
the rental activity involving the rental  
of property used in the trade or  
business activity may be grouped with  
the trade or business activity.  
2. An activity involving the rental of  
real property with an activity involving  
the rental of personal property (except  
personal property provided in  
connection with the real property or  
vice versa).  
1. Similarities and differences in  
types of trades or businesses,  
affected income tax returns consistent  
with the claimed grouping and make  
the required disclosure on the income  
tax return for the year in which you  
first discovered the failure to disclose.  
If the IRS discovered the failure to  
disclose, you must have reasonable  
cause for not making the required  
disclosure. For more information on  
disclosure requirements, see  
2. The extent of common control,  
3. The extent of common  
ownership,  
4. Geographical location, and  
5. Interdependencies between or  
among the activities.  
Example. You have a significant  
ownership interest in a bakery and a  
movie theater in Baltimore and in a  
bakery and a movie theater in  
Philadelphia. Depending on all the  
relevant facts and circumstances,  
there may be more than one  
3. Any activity with another activity  
in a different type of business and in  
which you hold an interest as a limited  
partner or as a limited entrepreneur  
(as defined in section 464(e)(2)) if that  
other activity engages in holding,  
producing, or distributing motion  
Revenue Procedure 2010-13  
available at IRS.gov/irb/  
New grouping. You must file a  
written statement with your original  
income tax return for the first tax year  
in which two or more activities are  
originally grouped into a single  
reasonable method for grouping your  
activities. For instance, the following  
groupings may or may not be  
permissible.  
picture films or videotapes; farming;  
leasing section 1245 property; or  
exploring for (or exploiting) oil and gas  
resources or geothermal deposits.  
activity. The statement must provide  
the names, addresses, and employer  
identification numbers (EINs), if  
applicable, for the activities being  
grouped as a single activity. In  
A single activity.  
A movie theater activity and a  
Activities conducted through part-  
nerships, S corporations, and C  
corporations subject to section  
469. Once a partnership or  
bakery activity.  
A Baltimore activity and a  
Philadelphia activity.  
addition, the statement must contain a  
declaration that the grouped activities  
make up an appropriate economic  
unit for the measurement of gain or  
loss under the passive activity rules.  
Four separate activities.  
corporation determines its activities  
under these rules, a partner or  
shareholder may use these rules to  
group those activities with:  
Once you choose a grouping under  
these rules, you must continue using  
that grouping in later tax years unless  
a material change in the facts and  
circumstances makes it clearly  
inappropriate.  
Addition to an existing grouping.  
You must file a written statement with  
your original income tax return for the  
tax year in which you add a new  
Each other,  
Activities conducted directly by the  
partner or shareholder, or  
Activities conducted through other  
activity to an existing group. The  
The IRS may regroup your  
partnerships and corporations.  
statement must provide the name,  
address, and EIN, if applicable, for the  
activity that is being added and for the  
activities in the existing group. In  
addition, the statement must contain a  
activities if your grouping fails to  
reflect one or more appropriate  
economic units and one of the primary  
purposes of your grouping is to avoid  
the passive activity limitations.  
A partner or shareholder may not  
treat as separate activities those  
activities grouped together by the  
partnership or corporation.  
Instructions for Form 8582-CR (Rev. 12-2019)  
-5-  
declaration that the activities make up basis reduction of the property to the  
is shown on Schedule K-1, box 15  
with code D.  
an appropriate economic unit for the  
measurement of gain or loss under  
the passive activity rules.  
extent that the credit hasn’t been  
allowed under the passive activity  
rules. Unallowed PACs that aren’t  
used to increase the basis of the  
credit property are carried forward  
until they are allowed. To make the  
election, complete Form 8582-CR,  
Part VI. No basis adjustment may be  
elected on a partial disposition of your  
interest in a passive activity.  
Mr. Jones's net passive income for  
2019 is zero.  
Mr. Jones will need the following  
Regrouping. You must file a written  
statement with your original income  
tax return for the tax year in which you  
regroup the activities. The statement  
must provide the names, addresses,  
and EINs, if applicable, for the  
forms to figure the low-income  
housing credit.  
1. Form 8586, Low-Income  
Housing Credit (not illustrated).  
2. Form 3800, General Business  
activities that are being regrouped. If  
two or more activities are being  
regrouped into a single activity, the  
statement must contain a declaration  
that the regrouped activities make up  
an appropriate economic unit for the  
measurement of gain or loss under  
the passive activity rules. In addition,  
the statement must contain an  
Credit (not illustrated).  
Example of How To Complete  
Form 8582-CR  
Note. For tax years beginning after  
2019, line numbers on the referenced  
forms may change. See the form  
instructions for the referenced forms  
on how to report the passive activity  
credit.  
3. Form 8582-CR, Passive  
Activity Credit Limitations.  
Step 1. Mr. Jones follows the  
instructions for code D on  
Schedule K-1, box 15, and enters the  
$12,000 low-income housing credit on  
lines 11 and 12 of Form 8586 and  
carries over the total to Form 3800,  
Part III, line 4d, column (c).  
explanation of why the original  
grouping was clearly inappropriate or  
the nature of the material change in  
the facts and circumstances that  
made the original grouping clearly  
inappropriate.  
In 2019, John Jones purchased an  
interest as a limited partner in  
Partnership A (which was an eligible  
small business). Mr. Jones is married  
and files a joint return. During 2019,  
the partnership placed in service a  
residential rental building that  
Step 2. Mr. Jones checks box B in  
Part III of Form 3800 and brings the  
$12,000 credit from the passive  
activity to line 32.  
Step 3. Line 33 of Form 3800 asks  
for the passive activity credits allowed  
for the current tax year. The amount is  
figured on Form 8582-CR and the  
worksheets. Worksheet 3 of Form  
8582-CR is used for the post-1989  
low-income housing credits.  
Dispositions  
Unallowed PACs, unlike unallowed  
passive activity losses, aren’t allowed  
when you dispose of your interest in  
an activity. However, you may elect to  
increase the basis of the credit  
qualified for the low-income housing  
credit. He has no other general  
business credits.  
Mr. Jones received a Schedule K-1  
(Form 1065) from the partnership. The  
low-income housing credit ($12,000)  
property by the amount of the original  
Worksheet 3 for Lines 3a and 3b  
Name of Activity  
(keep for your records)  
Current Year  
Prior Year  
Unallowed Credits  
Total Credits  
Credits  
From  
Form  
(a) Credit line 3a  
(b) Credit line 3b  
(c) Add cols. (a) and (b)  
Partnership A  
8586/3800, line 32  
12,000  
12,000  
Total. Enter on lines 3a and 3b of Form 8582-CR  
Instructions for Form 8582-CR (Rev. 12-2019)  
-6-  
 
Step 4. Mr. Jones follows the instructions for Worksheet 3 and enters the total credits from column (a) of that worksheet on Form 8582-CR,  
line 3a. He enters the total credits on line 3c and completes lines 5 through 7. Mr. Jones can skip Parts II and III and go to Part IV because the  
only credit he has is from a post-1989 low-income housing credit. He must also complete the computation for line 35 in the instructions to  
get the amount to enter on line 35 of the form.  
Passive Activity Credit Limitations  
OMB No. 1545-1034  
Form  
8582-CR  
See separate instructions.  
(Rev. December 2019)  
Department of the Treasury  
Internal Revenue Service  
Attach to Form 1040, 1040-SR, or 1041.  
Go to www.irs.gov/Form8582CR for the latest information.  
Attachment  
Sequence No. 89  
Name(s) shown on return  
Identifying number  
John and Mary Jones  
123-00-4567  
Part I  
Passive Activity Credits  
Caution: If you have credits from a publicly traded partnership, see Publicly Traded Partnerships (PTPs) in the  
instructions.  
Credits From Rental Real Estate Activities With Active Participation (Other Than Rehabilitation  
Credits and Low-Income Housing Credits) (See Lines 1a through 1c in the instructions.)  
1a Credits from Worksheet 1, column (a).  
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1a  
1b  
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b
c
Prior year unallowed credits from Worksheet 1, column (b) .  
Add lines 1a and 1b  
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1c  
Rehabilitation Credits From Rental Real Estate Activities and Low-Income Housing Credits for  
Property Placed in Service Before 1990 (or From Pass-Through Interests Acquired Before 1990)  
(See Lines 2a through 2c in the instructions.)  
2a Credits from Worksheet 2, column (a).  
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2a  
2b  
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b
Prior year unallowed credits from Worksheet 2, column (b) .  
Add lines 2a and 2b  
c
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2c  
3c  
Low-Income Housing Credits for Property Placed in Service After 1989 (See Lines 3a through 3c in  
the instructions.)  
3a Credits from Worksheet 3, column (a).  
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3a 12,000  
b
Prior year unallowed credits from Worksheet 3, column (b) .  
3b  
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12,000  
12,000  
c
Add lines 3a and 3b  
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All Other Passive Activity Credits (See Lines 4a through 4c in the instructions.)  
4a Credits from Worksheet 4, column (a).  
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4a  
4b  
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b
c
Prior year unallowed credits from Worksheet 4, column (b) .  
Add lines 4a and 4b  
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4c  
5
6
5
6
7
Add lines 1c, 2c, 3c, and 4c .  
Enter the tax attributable to net passive income (see instructions)  
-0-  
12,000  
Subtract line 6 from line 5. If line 6 is more than or equal to line 5, enter -0- and see instructions  
7
Note: If your ꢀling status is married ꢀling separately and you lived with your spouse at any time during the  
year, do not complete Part II, III, or IV. Instead, go to line 37.  
Part IV  
Special Allowance for Low-Income Housing Credits for Property Placed in Service After 1989  
Note: Complete this part only if you have an amount on line 3c. Otherwise, go to Part V.  
12,000  
-0-  
12,000  
12,000  
8,250  
8,250  
31  
32  
33  
34  
35  
36  
If you completed Part III, enter the amount from line 19. Otherwise, subtract line 16 from line 7 .  
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31  
32  
33  
34  
35  
36  
Enter the amount from line 30  
Subtract line 32 from line 31. If zero, enter -0- here and on line 36  
Enter the smaller of line 3c or line 33 .  
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Tax attributable to the remaining special allowance (see instructions)  
Enter the smaller of line 34 or line 35 .  
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Instructions for Form 8582-CR (Rev. 12-2019)  
-7-  
Line 35 computation:  
Line 35. Figure the tax attributable to the remaining special allowance as follows:  
A. Taxable income  
B. Tax on line A. for Form 1040 or 1040-SR, use the Tax Table, Tax Computation Worksheet, or other  
appropriate method you used to ꢀgure your tax. For Form 1041, use the Tax Rate Schedules, the Qualiꢀed  
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305,000  
Dividends Tax Worksheet, or Schedule D, whichever applies  
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78,105  
Enter $25,000 ($12,500 if married ꢀling a separate return and you and  
C.  
your spouse lived apart at all times during the year)  
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25,000  
-0-  
D. Enter amount, if any, from Form 8582, line 10  
E. Enter amount, if any, from Form 8582, line 14  
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-0-  
25,000  
F. Subtract lines D and E from line C  
G. Subtract line F from line A .  
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280,000  
H. Tax on line G. for Form 1040 or 1040-SR, use the Tax Table, Tax Computation Worksheet, or other  
appropriate method you used to ꢀgure your tax. For Form 1041, use the Tax Rate Schedules, the Qualiꢀed  
Dividends Tax Worksheet, or Schedule D, whichever applies  
I. Subtract line H from line B .  
J. Add lines 16 and 30 of Form 8582-CR and enter the total  
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69,855  
8,250  
-0-  
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K. Tax attributable to the remaining special allowance. Subtract line J from line I. Enter the result on  
Form 8582-CR, line 35  
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8,250  
Note. When using taxable income in the above computation, it isn’t necessary to reꢀgure items that are based on a percentage of  
adjusted gross income  
Step 5. Mr. Jones completes Form 8582-CR, Part V.  
Part V  
37  
Passive Activity Credit Allowed  
Passive Activity Credit Allowed. Add lines 6, 16, 30, and 36. See instructions to ꢀnd out how to  
report the allowed credit on your tax return and how to allocate allowed and unallowed credits if you  
have more than one credit or credits from more than one activity. If you have any credits from a  
8,250  
publicly traded partnership, see Publicly Traded Partnerships (PTPs) in the instructions.  
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37  
Step 6. After completing Form 8582-CR, Mr. Jones determines his allowed and unallowed credit. Because he has only one type of  
credit from a single passive activity, his allowed low-income housing credit for 2019 is the amount on line 37, or $8,250. His unallowed  
credit of $3,750 is determined by subtracting the allowed credit on line 37 from the total credit on line 5 ($12,000 – $8,250).  
Step7. Mr. Jones enters the allowed passive activity credit of $8,250 on Form 3800, line 33, and completes the rest of that form  
according to the Instructions for Form 3800. The unallowed credit of $3,750 is carried forward and used to ꢀgure the passive activity  
credit allowed for 2020.  
8582-CR. Enter the prior year  
unallowed credits in column (b) of  
Worksheet 1, 2, 3, or 4, whichever  
applies.  
Form 3800, General Business  
Credit. Enter the credits from Form  
3800, lines 2, 23, and 32, in column  
(a) of Worksheet 1, 2, 3, or 4.  
Form 8834, Qualified Electric Vehi-  
cle Credit. See the Instructions for  
Form 8834 for the amount to enter in  
column (a) of Worksheet 1 or 4.  
Specific Instructions  
Current Year Credits  
Convert any current year qualified  
expenditures into credits before  
beginning Worksheet 1, 2, 3, or 4. If  
the credits are from more than one  
activity or are of more than one type,  
separate the credits by activity and by  
type before making entries in the  
worksheets.  
You must adjust a prior year  
unallowed credit if you had to  
!
CAUTION  
recapture any part of the  
credit (for example, due to the early  
disposition of property) or transfer the  
credit to a bankruptcy estate.  
Prior Year Unallowed  
Credits  
To figure this year's PAC, you must  
take into account any credits from  
passive activities disallowed for prior  
years and carried forward to this year.  
For tax years beginning after  
Part I—Passive Activity  
Credits  
2019, line numbers on the  
!
CAUTION  
referenced forms may  
Use Part I to combine your credits  
from passive activities to determine if  
you have a PAC for the current year.  
change. See the form instructions for  
the referenced forms on how to report  
the current year passive activity credit.  
If you had only one type of prior  
year unallowed credit from a single  
passive activity, figure your prior year  
unallowed credit by subtracting line 37  
of your prior year Form 8582-CR from  
line 5 of your prior year Form  
8582-CR.  
If your credits from all passive  
activities exceed the tax attributable to  
net passive income, you have a PAC  
for the current year. Generally, you  
have net passive income if line 4 of  
Form 8582 shows income. For more  
information, see the instructions for  
Form 8582-CR, line 6.  
Example. You have a low-income  
housing credit from one activity and a  
research credit from a different  
activity. Enter the low-income housing  
credit in column (a) of Worksheet 2 or  
3 and make a separate entry for the  
research credit in column (a) of  
Worksheet 4.  
Otherwise, your prior year  
unallowed credits are the amounts  
shown in column (b) of Worksheet 9 in  
the prior year Instructions for Form  
Instructions for Form 8582-CR (Rev. 12-2019)  
-8-  
 
pass-through entity, use lines 3a  
through 3c only if you also acquired  
your interest in the pass-through entity  
after 1989. Use Worksheet 3 to figure  
the amounts to enter on lines 3a and  
3b.  
Lines 1a through 1c. Individuals  
and qualifying estates that actively  
participated in rental real estate  
activities must include the credits  
(other than rehabilitation credits or  
low-income housing credits) from  
these activities on lines 1a through 1c.  
Use Worksheet 1 to figure the  
Line 7. If line 7 is zero because the  
tax on the net passive income on  
line 6 is greater than your credits from  
passive activities on line 5, all your  
credits from passive activities are  
allowed. In this case, enter the  
amount from line 5 on line 37 and  
report the credits on the forms  
normally used. Don’t complete  
Worksheets 5 through 9.  
Include the credits in  
Worksheet 4, but not in  
!
amounts to enter on lines 1a and 1b.  
CAUTION  
Worksheet 2 or 3, if you are  
married filing a separate return and  
lived with your spouse at any time  
during the year.  
Part II—Special Allowance  
for Rental Real Estate  
Activities With Active  
Participation  
If you are married filing a  
Lines 4a through 4c. Individuals  
must include on lines 4a through 4c  
credits from passive activities that  
weren’t entered on Worksheets 1, 2,  
or 3. Trusts must include credits from  
all passive activities in Worksheet 4.  
Use Worksheet 4 to figure the  
separate return and lived with  
!
CAUTION  
your spouse at any time  
during the year, even if you actively  
participated in the rental real estate  
activity, include the credits in  
Married persons filing  
separate returns who lived  
!
Worksheet 4, not in Worksheet 1.  
CAUTION  
with their spouses at any time  
during the year aren’t eligible to  
complete Part II.  
amounts to enter on lines 4a and 4b.  
Note. You may take credits that  
arose in a prior tax year (other than  
low-income housing and rehabilitation  
credits) under the special allowance  
only if you actively participated in the  
rental real estate activity for both that  
prior year and this year. If you didn’t  
actively participate for both years,  
include the credits in Worksheet 4, not  
in Worksheet 1.  
Line 6. If Form 8582, line 4, shows  
net income or you didn’t complete  
Form 8582 because you had net  
passive income, you must figure the  
tax on the net passive income. If you  
have an overall loss on an entire  
disposition of your interest in a  
passive activity, reduce net passive  
income, if any, on Form 8582, line 4,  
to the extent of the loss (but not below  
zero) and use only the remaining net  
passive income in the computation  
below. If you had a net passive activity  
loss, enter -0- on line 6 and go to  
line 7.  
Use Part II to figure the credit  
allowed if you have any credits from  
rental real estate activities in which  
you actively participated (other than  
rehabilitation credits and low-income  
housing credits). See Rental  
Activities, earlier, for details.  
Line 9. Married persons filing  
separate returns who lived apart from  
their spouses at all times during the  
year must enter $75,000 on line 9  
instead of $150,000. Married persons  
filing separate returns who lived with  
their spouses at any time during the  
year aren’t eligible for the special  
allowance. They must enter -0- on  
line 16 and go to line 17.  
Lines 2a through 2c. Individuals  
(including limited partners) and  
qualifying estates who had  
rehabilitation credits from rental real  
estate activities or low-income  
housing credits for property placed in  
service before 1990 must include the  
credits from those activities on lines  
2a through 2c. Use Worksheet 2 to  
figure the amounts to enter on lines 2a  
and 2b.  
Figure the tax on net passive  
income as follows.  
A. Taxable income  
Line 10. To figure modified adjusted  
gross income, combine all the  
amounts used to figure adjusted gross  
income, except don’t take into  
account:  
including net  
passive income  
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If you have low-income housing  
credits for property placed in service  
after 1989, include those credits in  
Worksheet 3 instead of Worksheet 2.  
If you held an indirect interest in the  
property through a partnership, S  
corporation, or other pass-through  
entity, use Worksheet 3 only if you  
also acquired your interest in the  
pass-through entity after 1989.  
B. Tax on line A*  
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C. Taxable income  
without net passive  
Any passive activity loss as defined  
income  
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in section 469(d)(1),  
D. Tax on line C*  
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Any rental real estate loss allowed  
E. Subtract line D from line B  
to real estate professionals (defined  
Activities, earlier),  
and enter the result on  
Form 8582-CR, line 6  
.
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* For Form 1040 or 1040-SR, use the Tax Table, Tax  
Computation Worksheet, or other appropriate  
method you used to figure your tax. For Form 1041,  
use the Tax Rate Schedule, Qualified Dividends Tax  
Worksheet, or Schedule D, whichever applies.  
Any overall loss from a PTP,  
The taxable amount of social  
Lines 3a through 3c. Individuals  
(including limited partners) and  
qualifying estates who had  
security and tier 1 railroad retirement  
benefits,  
Deductible contributions to  
low-income housing credits from  
rental real estate activities for property  
placed in service after 1989 must  
include those credits on lines 3a  
through 3c. If you held an indirect  
interest in the property through a  
partnership, S corporation, or other  
traditional individual retirement  
accounts (IRAs) and section 501(c)  
(18) pension plans,  
Note. When using taxable income in  
the above computation, it isn’t  
necessary to refigure items that are  
based on a percentage of adjusted  
gross income.  
The deduction allowed for  
self-employment taxes,  
The exclusion from income of  
interest from series EE and I U.S.  
Instructions for Form 8582-CR (Rev. 12-2019)  
-9-  
 
savings bonds used to pay higher  
education expenses,  
When figuring modified adjusted  
gross income, any overall loss from  
an entire disposition of an interest in a  
passive activity is taken into account  
as a nonpassive loss if you don’t have  
allowance. They must enter -0- on  
line 16 and go to line 17.  
The exclusion of amounts received  
Line 15. Figure the tax attributable to  
under an employer's adoption  
assistance program,  
the amount on line 14 as follows.  
The student loan interest deduction, any net passive income after  
Note. When using taxable income in  
the computation below, it isn’t  
necessary to refigure items that are  
based on a percentage of adjusted  
gross income.  
The tuition and fees deduction, or  
Foreign-derived intangible income  
combining net income and losses  
from all other passive activities (that  
is, Form 8582, line 4 is a loss or zero).  
If you do have net passive income  
when you combine the net losses and  
net income from all other passive  
activities, the overall loss from the  
disposition is taken into account as a  
nonpassive loss only to the extent that  
it exceeds that net passive income.  
Line 12. Don’t enter more than  
$12,500 on line 12 if you are married  
filing a separate return and you and  
your spouse lived apart at all times  
during the year. Married persons filing  
separate returns who lived with their  
spouses at any time during the year  
aren’t eligible for the special  
and global intangible low-taxed  
income.  
Include in modified adjusted gross  
income any portfolio income and  
expenses that are clearly and directly  
allocable to portfolio income. Also  
include any income that is treated as  
nonpassive income, such as overall  
gain from a PTP and net income from  
an activity or item of property subject  
to the recharacterization of passive  
income rules. For information on  
recharacterization of income, see  
Pub. 925 or Temporary Regulations  
section 1.469-2T(f).  
Lines 1a and 1b. Use Worksheet 1 to ꢀgure the amounts to enter on lines 1a and 1b. Use line 1a for credits from rental real estate  
activities with active participation for the current year and line 1b for prior year unallowed credits from rental real estate activities with  
active participation in both the prior year in which the credit arose and the current year. See Special Allowance for Rental Real Estate  
Activities, earlier, for a deꢀnition of active participation.  
For credits from Form 3800, enter the source form (for example, Form 3468 or Form 6765) and “Form 3800, line” followed by the  
appropriate line number (2, 23, or 32) in the “From Form” column.  
After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and then  
complete line 1c.  
Note: Rehabilitation credits from rental real estate activities and low-income housing credits must be entered in Worksheet 2 or 3,  
whichever applies, even if you actively participated in the activity.  
Worksheet 1 for Lines 1a and 1b  
Name of Activity  
(keep for your records)  
Current Year  
Credits  
Prior Year  
Total Credits  
Unallowed Credits  
From  
Form  
(a) Credit line 1a  
(b) Credit line 1b  
(c) Add cols. (a) and (b)  
Totals. Enter on lines 1a and 1b of Form 8582-CR  
Lines 2a and 2b. Use Worksheet 2 to ꢀgure the amounts to enter on lines 2a and 2b. Use line 2a for rehabilitation credits and  
low-income housing credits from rental real estate activities for the current year and line 2b for prior year unallowed credits from those  
activities. However, use Worksheet 3 instead of Worksheet 2 for low-income housing credits for property placed in service after 1989. If  
you held an indirect interest in the property through a partnership, S corporation, or other pass-through entity, use Worksheet 3 only if  
you also acquired your interest in the pass-through entity after 1989. Use this worksheet if you don’t meet both requirements.  
Enter the source form (Form 3468 or Form 8586) and “Form 3800, line” followed by the appropriate line number (2, 23, or 32) in the  
“From Form” column.  
After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and  
then complete line 2c.  
Worksheet 2 for Lines 2a and 2b  
Name of Activity  
(keep for your records)  
Current Year  
Credits  
Prior Year  
Total Credits  
Unallowed Credits  
From  
Form  
(a) Credit line 2a  
(b) Credit line 2b  
(c) Add cols. (a) and (b)  
Totals. Enter on lines 2a and 2b of Form 8582-CR  
Instructions for Form 8582-CR (Rev. 12-2019)  
-10-  
Lines 3a and 3b. Use Worksheet 3 to ꢀgure the amounts to enter on lines 3a and 3b for low-income housing credits for property  
placed in service after 1989. If you held an indirect interest in the property through a partnership, S corporation, or other pass-through  
entity, use Worksheet 3 only if you also acquired your interest in the pass-through entity after 1989. Use line 3a for the current year  
credits and line 3b for prior year unallowed credits for those activities.  
Enter “Form 3800, line” followed by the appropriate line number (2, 23, or 32) in the “From Form” column.  
After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and  
then complete line 3c.  
Worksheet 3 for Lines 3a and 3b  
Name of Activity  
(keep for your records)  
Current Year  
Credits  
Prior Year  
Total Credits  
Unallowed Credits  
From  
Form  
(a) Credit line 3a  
(b) Credit line 3b  
(c) Add cols. (a) and (b)  
Totals. Enter on lines 3a and 3b of Form 8582-CR  
Lines 4a and 4b. Use Worksheet 4 to ꢀgure the amounts to enter on lines 4a and 4b. Use line 4a for all other passive activity credits for  
the current year and line 4b for prior year unallowed credits from those activities.  
For credits from Form 3800, enter the source form (for example, Form 3468 or Form 6765) and “Form 3800, line” followed by the  
appropriate line number (2, 23, or 32) in the “From Form” column.  
After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and  
then complete line 4c.  
Worksheet 4 for Lines 4a and 4b  
Name of Activity  
(keep for your records)  
Current Year  
Credits  
Prior Year  
Total Credits  
Unallowed Credits  
From  
Form  
(a) Credit line 4a  
(b) Credit line 4b  
(c) Add cols. (a) and (b)  
Totals. Enter on lines 4a and 4b of Form 8582-CR  
A. Taxable income  
B. Tax on line A*  
.
.
.
.
.
.
.
.
.
.
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.
.
C. Enter amount from  
Form 8582-CR,  
line 14  
.
.
.
.
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.
.
D. Subtract line C from  
line A  
.
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E. Tax on line D*  
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.
F. Subtract line E from line B  
and enter the result on  
Form 8582-CR, line 15  
.
* For Form 1040 or 1040-SR, use the Tax Table,  
Tax Computation Worksheet, or other appropriate  
method you used to figure your tax. For Form  
1041, use the Tax Rate Schedule, Qualified  
Dividends Tax Worksheet, or Schedule D,  
whichever applies.  
Instructions for Form 8582-CR (Rev. 12-2019)  
-11-  
A. Taxable income  
B. Tax on line A*  
.
.
.
.
.
.
.
.
Line 35. Figure the tax attributable to  
the remaining special allowance as  
follows.  
Part III—Special Allowance  
for Rehabilitation Credits  
From Rental Real Estate  
Activities and Low-Income  
Housing Credits for  
.
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C. Enter amount from Form  
8582-CR, line 26  
.
.
.
.
A. Taxable income  
B. Tax on line A*  
C. Enter $25,000  
.
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.
D. Subtract line C from line  
A
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E. Tax on line D*  
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.
Property Placed in Service  
Before 1990 (or From  
($12,500 if married  
filing a separate  
return and you and  
your spouse lived  
apart at all times  
during the  
F. Subtract line E from line B and  
enter the result on Form 8582-CR,  
line 27  
Pass-Through Interests  
.
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.
Acquired Before 1990)  
* For Form 1040 or 1040-SR, use the Tax Table, Tax  
Computation Worksheet, or other appropriate  
method you used to figure your tax. For Form 1041,  
use the Tax Rate Schedule, Qualified Dividends Tax  
Worksheet, or Schedule D, whichever applies.  
Married persons filing  
year)  
.
.
.
.
.
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.
separate returns who lived  
!
D. Enter amount, if  
CAUTION  
with their spouses at any time  
any, from Form  
during the year aren’t eligible to  
complete Part III.  
8582, line 10  
.
.
E. Enter the amount,  
if any, from Form  
Use Part III to figure the credit  
allowed if you have any rehabilitation  
credits or low-income housing credits  
for property placed in service before  
1990. Also use this part if your  
Note. When using taxable income in  
the above computation, it isn’t  
necessary to refigure items that are  
based on a percentage of adjusted  
gross income.  
8582, line 14  
.
.
F. Subtract lines D and E  
from line C  
.
.
.
.
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.
G. Subtract line F from line  
A
.
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.
.
low-income housing credit is from a  
partnership, S corporation, or other  
pass-through entity in which you  
acquired your interest before 1990,  
regardless of the date the property  
was placed in service.  
H. Tax on line G*  
.
.
.
.
.
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.
.
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.
.
Part IV—Special  
I. Subtract line H from line B  
J. Add lines 16 and 30 of  
Allowance for Low-Income  
Housing Credits for  
Property Placed in Service  
After 1989  
Form 8582-CR and enter the  
total  
.
.
.
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.
.
K. Tax attributable to the remaining  
special allowance. Subtract line J  
from line I. Enter the result on  
Line 21. Married persons filing  
separate returns who lived apart from  
their spouses at all times during the  
year must enter $125,000 on line 21,  
instead of $250,000.  
Skip lines 21 through 26 if you  
completed Part II of this form and your  
modified adjusted gross income on  
line 10 was $100,000 or less ($50,000  
or less if married filing separately and  
you lived apart from your spouse for  
the entire year). Instead, enter the  
amount from line 15 on line 27.  
Married persons filing  
Form 8582-CR, line 35  
.
.
.
.
.
separate returns who lived  
!
CAUTION  
with their spouses at any time  
during the year aren’t eligible to  
complete Part IV.  
* For Form 1040 or 1040-SR, use the Tax Table, Tax  
Computation Worksheet, or other appropriate  
method you used to figure your tax. For Form 1041,  
use the Tax Rate Schedule, Qualified Dividends Tax  
Worksheet, or Schedule D, whichever applies.  
Use Part IV to figure the credit  
allowed if you have any low-income  
housing credits for property placed in  
service after 1989. If you held an  
indirect interest in the property  
through a partnership, S corporation,  
or other pass-through entity, use Part  
IV only if your interest in the  
Note. When using taxable income in  
the above computation, it isn’t  
necessary to refigure items that are  
based on a percentage of adjusted  
gross income.  
Line 24. Don’t enter more than  
$12,500 on line 24 if you are married  
filing a separate return and lived apart  
from your spouse for the entire year.  
pass-through entity was also acquired  
after 1989.  
Line 27. Figure the tax attributable to  
the amount on line 26 as follows.  
Instructions for Form 8582-CR (Rev. 12-2019)  
-12-  
Instructions for Worksheet 5  
Complete Worksheet 5 if you have an amount on Form 8582-CR, line 1c and you have credits from more than one activity. For credits  
to be reported on Form 3800, enter “Form 3800, line” followed by the appropriate line number (3, 24, or 33).  
Column (a). Enter the credits from Worksheet 1, column (c), in column (a) of this worksheet.  
Column (b). Divide each of the credits shown in column (a) by the total of the credits in column (a) and enter the ratio for each of the  
activities in column (b). The total of all the ratios must equal 1.00.  
Column (c). Multiply Form 8582-CR, line 16 by the ratios in column (b) and enter the result in column (c). If the total of this column is  
the same as the total of column (a), all credits for the activities in column (a) of this worksheet are allowed. Report them on the forms  
normally used, and complete Worksheet 6 if you have credits shown in Worksheet 2. Also complete Worksheet 7 or 8 if you have  
credits shown in Worksheet 3 or 4. If the total of column (a) is more than the total of column (c), complete column (d).  
Column (d). Subtract column (c) from column (a) and enter the result in this column. Also enter the name of each activity and the form  
the credit is reported on in Worksheet 8 and enter the amount from column (d) of this worksheet in column (a) of Worksheet 8. Also  
complete Worksheet 6 or 7 if you have credits on Form 8582-CR, line 2c or 3c.  
Worksheet 5 for Credits on Line 1a or 1b  
(keep for your records)  
(d) Subtract  
column (c) from  
column (a)  
Form To Be  
Reported on  
(c) Special  
Allowance  
(a) Credits  
(b) Ratios  
Name of Activity  
Totals  
1.00  
Instructions for Worksheet 6  
Complete Worksheet 6 if you have an amount on Form 8582-CR, line 2c and you have credits from more than one activity. For credits  
to be reported on Form 3800, enter “Form 3800, line” followed by the appropriate line number (3, 24, or 33).  
Column (a). Enter the credits from Worksheet 2, column (c), in column (a) of this worksheet.  
Column (b). Divide each of the credits shown in column (a) by the total of the credits in column (a) and enter the ratio for each of the  
activities in column (b). The total of all the ratios must equal 1.00.  
Column (c). Multiply Form 8582-CR, line 30 by the ratios in column (b) and enter the result in column (c). If the total of this column is  
the same as the total of column (a), all credits for the activities in column (a) of this worksheet are allowed. Report them on the forms  
normally used, and complete Worksheet 7 or 8 if you have credits shown in Worksheet 3 or 4 or amounts in column (d) of Worksheet 5.  
If the total of column (a) is more than the total of column (c), complete column (d).  
Column (d). Subtract column (c) from column (a) and enter the result in this column. Also enter the name of each activity and the form  
the credit is reported on in Worksheet 8 and enter the amount from column (d) of this worksheet in column (a) of Worksheet 8.  
Worksheet 6 for Credits on Line 2a or 2b  
(keep for your records)  
(d) Subtract  
column (c) from  
column (a)  
Form To Be  
Reported on  
(c) Special  
Allowance  
Name of Activity  
(a) Credits  
(b) Ratios  
Totals  
1.00  
Instructions for Form 8582-CR (Rev. 12-2019)  
-13-  
Instructions for Worksheet 7  
Complete Worksheet 7 if you have credits on Form 8582-CR, line 3c and you have credits from more than one activity.  
Column (a). Enter the credits from Worksheet 3, column (c), in column (a) of this worksheet.  
Column (b). Divide each of the credits shown in column (a) by the total of the credits in column (a) and enter the ratio for each of the activities  
in column (b). The total of all the ratios must equal 1.00.  
Column (c). Multiply Form 8582-CR, line 36 by the ratios in column (b) and enter the result in column (c). If the total of this column is the same  
as the total of column (a), all credits for the activities in column (a) of this worksheet are allowed. Report them on the forms normally used, and  
complete Worksheet 8 if you have credits shown in Worksheet 4 or amounts in column (d) of Worksheet 5 or 6. If the total of column (a) is  
more than the total of column (c), complete column (d).  
Column (d). Subtract column (c) from column (a) and enter the result in this column. Also enter the name of each activity and the form the  
credit is reported on in Worksheet 8 and enter the amount from column (d) of this worksheet in column (a) of Worksheet 8.  
(keep for your records)  
Worksheet 7 for Credits on Line 3a or 3b  
(d) Subtract  
column (c)  
from column (a)  
Form To Be  
Reported on  
(c) Special  
Allowance  
Name of Activity  
(a) Credits  
(b) Ratios  
Totals  
1.00  
Instructions for Worksheet 8  
Complete Worksheet 8 if you have credits on Form 8582-CR, line 4c from more than one activity or reported on different forms or you have  
amounts in column (d) of Worksheets 5, 6, or 7. For credits to be reported on Form 3800, enter “Form 3800, line” followed by the appropriate line  
number (3, 24, or 33).  
Column (a). Enter the amounts, if any, from column (c) of Worksheet 4 and column (d) of Worksheets 5, 6, and 7.  
Column (b). Divide each of the credits in column (a) by the total of all the credits in column (a) and enter the ratio for each of the activities in  
column (b). The total of all the ratios must equal 1.00.  
Column (c). Complete the following computation:  
A. Enter Form 8582-CR, line 5  
B. Enter Form 8582-CR, line 37  
C. Subtract line B from line A  
Multiply line C by the ratios in column (b) and enter the results in column (c). Complete Worksheet 9 to determine the credits allowed for the  
current year.  
Worksheet 8—Allocation of Unallowed Credits  
(keep for your records)  
Form To Be  
Reported on  
Name of Activity  
(a) Credits  
(b) Ratios  
(c) Unallowed Credits  
Totals  
1.00  
Instructions for Worksheet 9  
Column (a). Enter all the activities shown in Worksheet 8. The credits entered in column (a) of this worksheet are the credits shown in column  
(c) of Worksheets 1, 2, 3, and 4 for the activities listed in Worksheet 8. For credits to be reported on Form 3800, enter “Form 3800, line”  
followed by the appropriate line number (3, 24, or 33).  
Column (b). Enter the amounts from column (c) of Worksheet 8 in this column. These are your unallowed credits for the current year.  
Column (c). Subtract column (b) from column (a). These are the allowed credits for the current year. Report the amounts in this column on the  
forms normally used. See Reporting Allowed Credits on Your Tax Return, in the instructions.  
Worksheet 9—Allowed Credits  
Name of Activity  
(keep for your records)  
Form To Be  
Reported on  
(a) Credits  
(b) Unallowed Credits (c) Allowed Credits  
Totals  
Instructions for Form 8582-CR (Rev. 12-2019)  
-14-  
make a market in the interest. An  
interest is treated as readily tradable if  
the interest is regularly quoted by  
persons, such as brokers or dealers,  
who are making a market in the  
interest.  
Step 2. Passive activity credits from  
each PTP are allowed to the extent of  
the tax attributable to net passive  
income from the same PTP. Credits in  
excess of the tax attributable to net  
passive income may be allowed under  
one or more steps below.  
Complete Steps 3 through 5 only if  
your passive activity credits (including  
prior year unallowed credits) include  
rehabilitation credits from rental real  
estate activities from PTPs,  
Part V—Passive Activity  
Credit Allowed  
Use Part V to figure the PAC (as  
determined in Part I) that is allowed  
for the current year for all passive  
activities.  
The substantial equivalent of a  
secondary market exists if there is no  
identifiable market maker, but holders  
of interests have a readily available,  
regular, and ongoing opportunity to  
sell or exchange their interests  
through a public means of obtaining or  
providing information on offers to buy,  
sell, or exchange interests. Similarly,  
the substantial equivalent of a  
Line 37. If you have only one type of  
credit, the amount on line 37 is the  
credit allowed for the year. Enter this  
amount on the form where it is  
normally reported. See Reporting  
later. Your unallowed credit is line 5  
minus line 37.  
Use Worksheets 5 through 9,  
whichever apply, to allocate the  
allowed and unallowed credits if you  
have credits from more than one  
activity. Also use the worksheets if  
you have more than one type of credit.  
low-income housing credits for  
property placed in service before  
1990 from PTPs, or low-income  
housing credits from PTPs in which  
you acquired your interest before  
1990 (regardless of the date placed in  
service).  
Step 3. Reduce rehabilitation credits  
from rental real estate activities from  
each PTP, low-income housing  
secondary market exists if  
prospective buyers and sellers have  
the opportunity to buy, sell, or  
exchange interests in a timeframe and  
with the regularity and continuity that  
the existence of a market maker  
would provide.  
Keep a record of each unallowed  
credits for property placed in service  
before 1990 from each PTP, and any  
low-income housing credits (including  
prior year unallowed credits) from  
each PTP in which you acquired your  
interest before 1990 (regardless of the  
date placed in service) to the extent of  
the tax, which was figured in Step 1,  
attributable to net passive income  
from that PTP.  
Step 4. Before beginning this step,  
complete Form 8582-CR if you have  
any passive credits that aren’t from  
PTPs. Subtract the total of lines 16,  
30, and 36, if any, of Form 8582-CR  
from the amount on line 27 of Form  
8582-CR to figure the tax attributable  
to the special allowance available for  
the credits in Step 3.  
credit and the activity to which it  
Credits From PTPs  
belongs so you may claim the credit if  
it becomes allowable in a future year.  
A credit from a passive activity held  
through a PTP is allowed to the extent  
of the tax attributable to net passive  
income from that partnership. In  
addition, rehabilitation credits and  
low-income housing credits from  
rental real estate activities held  
through PTPs are allowed to the  
extent of any special allowance that  
remains after taking into account  
losses and credits from rental real  
estate activities not owned through  
Reporting Allowed Credits on  
Your Tax Return  
For tax years beginning after  
2019, line numbers on the  
!
CAUTION  
referenced forms may  
change. See the form instructions for  
the referenced forms on how to report  
the passive activity credit allowed.  
Form 3800. Enter on Form 3800,  
line 3, 24, and 33, whichever apply,  
the passive activity general business  
credits allowed.  
Form 8834. See the Instructions for  
Form 8834 for instructions on how to  
report the passive activity credit  
allowed.  
Don’t enter credits from PTPs  
on the worksheets or on Form  
!
If your only passive credits are from  
PTPs, complete lines 21 through 27 of  
Form 8582-CR as a worksheet. The  
amount on line 27 is the tax  
CAUTION  
8582-CR. Instead, use the  
following steps to figure the allowed  
and unallowed credits from passive  
activities held through PTPs.  
Publicly Traded  
attributable to the special allowance  
available for the credits in Step 3.  
Partnerships (PTPs)  
Computation of Allowed  
Passive Activity Credits From  
PTPs  
Complete Steps 1 and 2 only if you  
have net passive income from a PTP  
with passive activity credits (including  
prior year unallowed credits).  
A PTP is a partnership whose  
interests are traded on an established  
securities market or are readily  
tradable on a secondary market (or its  
substantial equivalent).  
Step 5. Rehabilitation credits from  
rental real estate activities of PTPs,  
low-income housing credits for  
property placed in service before  
1990 by PTPs, and low-income  
housing credits from PTPs in which  
you acquired your interest before  
1990 (regardless of the date placed in  
service) allowed under the special  
allowance are the smaller of the total  
credits from Step 3 or the amount  
figured in Step 4. If Step 4 is smaller  
than Step 3, allocate the amount in  
An established securities market  
includes any national securities  
exchange and any local exchange  
registered under the Securities  
Step 1. Figure the tax attributable to  
net passive income from each PTP  
with passive activity credits (including  
prior year unallowed credits) by  
Exchange Act of 1934 or exempted  
from registration because of the  
limited volume of transactions. It also  
includes any over-the-counter market.  
following the steps shown in the  
worksheet in the line 6 instructions.  
Complete a separate tax computation  
for each PTP with net passive income.  
A secondary market generally  
exists if a person stands ready to  
Instructions for Form 8582-CR (Rev. 12-2019)  
-15-  
   
Step 4 pro rata to the credits from  
each PTP in Step 3.  
We need it to ensure that you are  
complying with these laws and to  
allow us to figure and collect the right  
amount of tax.  
Step 10. Figure the allowed and  
unallowed credits from each PTP.  
Report the allowed credits on the  
forms normally used. Keep a record of  
the unallowed credits to be carried  
forward to next year.  
Complete Steps 6 through 8 only if  
you have low-income housing credits  
(including prior year unallowed  
You aren’t required to provide the  
information requested on a form that  
is subject to the Paperwork Reduction  
Act unless the form displays a valid  
OMB control number. Books or  
credits) for property placed in service  
after 1989 from a PTP in which you  
acquired your interest after 1989.  
Part VI—Election To  
Increase Basis of Credit  
Property  
Step 6. Reduce low-income housing  
credits (including prior year unallowed  
credits) for property placed in service  
after 1989 from each PTP in which  
you also acquired your interest after  
1989 to the extent of the tax  
records relating to a form or its  
instructions must be retained as long  
as their contents may become  
Complete Part VI if you disposed of  
your entire interest in a passive  
material in the administration of any  
activity and elect to increase the basis Internal Revenue law. Generally, tax  
of the credit property used in the  
activity by the unallowed credit that  
reduced the basis of the property.  
returns and return information are  
confidential, as required by section  
6103.  
attributable to net passive income  
from that PTP, which was figured in  
Step 1.  
Line 38. Check the box if you elect to  
increase the basis of credit property  
used in a passive activity by the  
The time needed to complete and  
file this form will vary depending on  
individual circumstances. The  
estimated burden for individual  
taxpayers filing this form is approved  
under OMB control number  
Step 7. Before beginning this step,  
complete Form 8582-CR if you have  
any passive credits that aren’t from  
PTPs. Subtract the sum of the credits  
allowed in Step 5 above and Form  
8582-CR, line 36, from the amount on  
Form 8582-CR, line 35, to figure the  
tax attributable to the special  
unallowed credit that reduced the  
property's basis. The election is  
available for a fully taxable disposition  
of an entire interest in an activity for  
which a basis adjustment was made  
as a result of placing in service  
1545-0074 and is included in the  
estimates shown in the instructions for  
their individual income tax return. The  
estimated burden for all other  
taxpayers who file this form is shown  
below.  
allowance available for the credits in  
Step 6.  
property for which a credit was taken.  
You may elect to increase the basis of  
the credit property immediately before  
the disposition (by an amount no  
greater than the amount of the original  
basis reduction) to the extent that the  
credit hadn’t been allowed previously  
because of the passive activity credit  
limitations. The amount of the  
If your only passive credits are from  
PTPs, complete the steps shown in  
the worksheet in the line 35  
Recordkeeping. . . . . .  
2 hr., 4 min.  
instructions. Subtract the credits  
allowed in Step 5 above from the tax  
figured on line K of that worksheet.  
The result is the tax attributable to the  
special allowance available for the  
credits in Step 6.  
Learning about the  
law or the form. . . . . .  
6 hr., 4 min.  
Preparing the form. . . 4 hr., 19 min.  
unallowed credit that may be applied  
against tax is reduced by the amount  
of the basis adjustment.  
Copying, assembling,  
and sending the form  
to the IRS . . . . . . . . . .  
Step 8. Low-income housing credits  
allowed under the special allowance  
for property placed in service after  
1989 from a PTP in which you also  
acquired your interest after 1989 are  
the smaller of the total credits from  
Step 6 or the amount figured in Step  
7. If Step 7 is smaller than Step 6,  
allocate the amount in Step 7 pro rata  
to the credits from each PTP in Step  
6.  
1 hr., 9 min.  
No basis adjustment may be  
elected on a partial disposition of your  
interest in a passive activity or if the  
disposition isn’t fully taxable. The  
amount of any unallowed credit,  
however, remains available to offset  
the tax attributable to net passive  
income.  
If you have suggestions for making  
this form simpler, we would be happy  
to hear from you. See the instructions  
for the tax return with which this form  
is filed.  
Paperwork Reduction Act Notice.  
We ask for the information on this  
form to carry out the Internal Revenue  
laws of the United States. You are  
required to give us the information.  
Step 9. Add the credits from Steps 2,  
5, and 8. These are the total credits  
allowed from passive activities of  
PTPs.  
Instructions for Form 8582-CR (Rev. 12-2019)  
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