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Page 3 of 16 Instructions for Form 8582-CR (Rev. 01-2012) 10:43 - 28-MAR-2012
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
end of the year, are filing a separate ($50,000 or less if married filing Reporting Credits
returnspouseforattheanyyear,timeandduringlivedthewithyear.your separately),on the amountfigureof theyourmaximumcredits based From the Activities
Only an individual, a qualifying special allowance referred to in the Trade or business activities with
estate, or a qualified revocable trust preceding paragraph. material participation. If you
that made an election to treat the materially participated in a trade or
trust as part of the decedent’s estate If your modified adjusted gross business activity, the activity is not a
may actively participate in a rental income is more than $100,000 passive activity. Report the credits
real estate activity. Unless future ($50,000 if married filing separately) from the activity on the forms you
regulations provide an exception, but less than $150,000 ($75,000 if normally use.
limited partners are not treated as married filing separately), your Trade or business activities
actively participating in a special allowance is limited to 50% of without material participation. If
partnership’s rental real estate the difference between $150,000 you did not materially participate in a
activity. ($75,000 if married filing separately) trade or business activity, the activity
A qualifying estate is the estate of and your modified adjusted gross is a passive activity. Generally, you
a decedent for tax years ending less income. must use Worksheet 4, later, to figure
than 2 years after the date of the the amount to enter on Form
decedent’s death if the decedent Generally, if your modified 8582-CR for each trade or business
would have satisfied the active adjusted gross income is $150,000 or activity in which you did not materially
participation requirements for the more ($75,000 or more if married participate. However, if you held the
rental real estate activity for the tax filing separately), there is no special activity through a PTP, special rules
year the decedent died. allowance. apply. See Publicly Traded
Partnerships (PTPs), later.
A qualified revocable trust may However, for low-income housing
elect to be treated as part of a credits for property placed in service Material Participation
participationspecialdecedent’sbydecedent’sactivities.bothallowancetheTheexecutorestateestateinelectionrentalforandfor(ifrealactivepurposesmusttheany)estatetrusteebeof themadeof theofcredits,incomeadjustedbeforeIf your modified1990isthegrossmorelimitsandincomethanadjustedforonrehabilitationmodified$200,000aregrossincreased.includeswithinterestForthatthefollow,an activitymaterialinanytheparticipationworkactivityifparticipationyoudoneownedatingenerallytheconnectiontimeantestsyou
the revocable trust. For details, see ($100,000 if married filing separately) did the work. The capacity in which
Regulations section 1.645-1. but less than $250,000 ($125,000 if you did the work does not matter.
married filing separately), your However, work is not participation if:
You are not considered to actively special allowance is limited to 50% of • It is not work that an owner would
participate in a rental real estate the difference between $250,000 customarily do in the same type of
activity if at any time during the tax ($125,000 if married filing separately) activity, and
year your interest (including your and your modified adjusted gross • One of your main reasons for doing
spouse’s interest) in the activity was income. the work was to avoid the
less than 10% (by value) of all disallowance of losses or credits from
interests in the activity. If your modified adjusted gross the activity under the passive activity
Active participation is a less income is $250,000 or more rules.
stringent requirement than material ($125,000 or more if married filing Proof of participation. You may
participation (see Material separately), there is no special prove your participation in an activity
Participation, later). You may be allowance. by any reasonable means. You do
treated as actively participating if, for not have to maintain
example, you participated in making No modified adjusted gross contemporaneous daily time reports,
management decisions or arranging income limitation applies when logs, or similar documents if you can
for others to provide services (such figuring the special allowance for establish your participation by other
as repairs) in a significant and bona low-income housing credits for reasonable means. For this purpose,
fide sense. Management decisions property placed in service after 1989 reasonable means include, but are
that may count as active participation (other than from a pass-through entity not limited to, identifying services
include: in which you acquired your interest performed over a period of time and
• Approving new tenants, before 1990). the approximate number of hours
• Deciding on rental terms, spent performing the services during
• Approving capital or repair that period, based on appointment
expenditures, and Trade or Business books, calendars, or narrative
• Other similar decisions. Activities summaries.
The maximum special allowance is: A trade or business activity is an Tests for individuals. You
• $25,000 for single individuals and activity (other than a rental activity or materially participated for the tax year
married individuals filing a joint return an activity treated as incidental to an in an activity if you satisfy at least one
for the tax year. activity of holding property for of the following tests.
• $12,500 for married individuals investment) that: 1. You participated in the activity
spouseswhoyear.yearfileandseparateatwhoalllivedtimesreturnsapartduringfromforthethetheirtaxtax orsectionbusiness1. Involves162),(withinthe conductthe meaningof a tradeof forofforthe2.themoreYourparticipationtaxthanyearparticipation500washours.insubstantiallytheinactivitythe activityofallall
• $25,000 for a qualifying estate 2. Is conducted in anticipation of individuals (including individuals who
reduced by the special allowance for starting a trade or business, or did not own any interest in the
which the surviving spouse qualified. 3. Involves research or activity) for the year.
Modified adjusted gross income experimental expenditures deductible 3. You participated in the activity
limitation. If your modified adjusted under section 174 (or that would be if for more than 100 hours during the
gross income (defined in the you chose to deduct rather than tax year, and you participated at least
instructions, later) is $100,000 or less capitalize them). as much as any other individual
Instructions for Form 8582-CR (Rev. 01-2012) -3-
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