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Instructions for Form

8582-CR

(Rev. December 2024)
Passive Activity Credit Limitations

Section references are to the Internal Revenue Code 1. Trade or business activities in which you materially
unless otherwise noted. participated for the tax year.
2. Any rental real estate activity in which you materially
General Instructions participated if you were a “real estate professional” for the
tax year. You were a real estate professional only if:
Future Developments a. More than half of the personal services you
For the latest developments related to Form 8582-CR and performed in trades or businesses during the tax year
its instructions, such as legislation enacted after they were were performed in real property trades or businesses in
published, go to IRS.gov/Form8582CR. which you materially participated, and
b. You performed more than 750 hours of services
Purpose of Form
during the tax year in real property trades or businesses in
Form 8582-CR is used by noncorporate taxpayers to which you materially participated.
figure the amount of any passive activity credit (PAC) for
the current tax year (including any prior year unallowed For purposes of item 2, each interest in rental real
credits) and the amount of credit allowed for the current estate is a separate activity unless you elect to treat all
year. It is also used to make the election to increase the interests in rental real estate as one activity. See
basis of credit property when a taxpayer disposes of his or Regulations section 1.469–9(g)(3) for details.
her interest in an activity. If you are married filing jointly, one spouse must
PACs that aren’t allowed in the current year are carried separately meet both 2a and 2b without taking into
forward until they are allowed against the tax on either net account services performed by the other spouse.
passive income or the special allowance, if applicable. A real property trade or business is any real property
Different rules apply to your activities and the related development, redevelopment, construction,
credit, depending on the type of activity. Generally, reconstruction, acquisition, conversion, rental, operation,
passive activities include: management, leasing, or brokerage trade or business.
• Trade or business activities in which you didn’t Services you performed as an employee aren’t treated
materially participate for the tax year. as performed in a real property trade or business unless
• Rental activities, regardless of your participation. you owned more than 5% of the stock (or more than 5% of
See Trade or Business Activities and Rental Activities, the capital or profits interest) in the employer.
later. 3. A working interest in an oil or gas well. Your working
For more information, see Pub. 925, Passive Activity interest must be held directly or through an entity that
and At-Risk Rules. doesn’t limit your liability (such as a general partner
interest in a partnership). In this case, it doesn’t matter
Note. Corporations subject to the passive activity rules whether you materially participated in the activity for the
must use Form 8810, Corporate Passive Activity Loss and tax year.
Credit Limitations. If, however, your liability was limited for part of the year
(for example, you converted your general partner interest
Who Must File to a limited partner interest during the year), some of your
Form 8582-CR is filed by individuals, estates, and trusts income and losses from the working interest may be
with any of the following credits from passive activities. treated as passive activity gross income and passive
• General business credits. activity deductions. See Temporary Regulations section
• Qualified plug-in electric and electric vehicle credit. 1.469-1T(e)(4)(ii).
Overview of Form 4. The rental of a dwelling unit you used as a
residence if section 280A(c)(5) applies. This section
The form contains six parts. The Specific Instructions
applies if you rented out a dwelling unit that you also used
include, at the beginning of the instructions for each part,
as a home during the year for a number of days that
a brief explanation of the purpose or use of that part.
exceeds the greater of 14 days or 10% of the number of
These explanations give a general overview of how the
days during the year that the home was rented at a fair
form works.
rental.
Activities That Aren’t Passive 5. An activity of trading personal property for the
account of owners of interests in the activity. For purposes
Activities
of this rule, personal property means property that is
The following aren’t passive activities.
Instructions for Form 8582CR (Rev. 12-2024) Catalog Number 64649B
Dec 3, 2024 Department of the Treasury Internal Revenue Service www.irs.gov

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actively traded such as stocks, bonds, and other holding the property is to realize a gain from its
securities. See Temporary Regulations section appreciation and the gross rental income is less than 2%
1.469-1T(e)(6). of the smaller of the unadjusted basis or the fair market
value (FMV) of the property.
Generally, credits from these activities aren’t entered on
Form 8582-CR. However, credits from these activities may Unadjusted basis is the cost of the property without
be subject to limitations other than the passive credit regard to depreciation deductions or any other basis
limitation rules. adjustment described in section 1016.
The rental of property is incidental to a trade or
Rental Activities business activity if:
A rental activity is a passive activity even if you materially a. You own an interest in the trade or business activity
participated in the activity (unless it’s a rental real estate during the tax year,
activity in which you materially participated and you were
a real estate professional). b. The rental property was mainly used in the trade or
business activity during the tax year or during at least 2 of
However, if you meet any of the five exceptions listed the 5 preceding tax years, and
below, the rental of the property isn’t treated as a rental c. The gross rental income from the property is less
activity. See Reporting Credits From the Activities, later, if than 2% of the smaller of the unadjusted basis or the FMV
you meet any of the exceptions. of the property.
An activity is a rental activity if tangible property (real or Lodging provided for the employer's convenience to an
personal) is used by customers or held for use by employee or the employee's spouse or dependents is
customers and the gross income (or expected gross incidental to the activity or activities in which the employee
income) from the activity represents amounts paid (or to performs services.
be paid) mainly for the use of the property. It doesn’t
4. You customarily make the rental property available
matter whether the use is under a lease, a service
during defined business hours for nonexclusive use by
contract, or some other arrangement.
various customers.
Exceptions 5. You provide property for use in a nonrental activity
An activity isn’t a rental activity if any of the following of a partnership, S corporation, or joint venture in your
exceptions are met. capacity as an owner of an interest in the partnership, S
corporation, or joint venture.
1. The average period of customer use is:
a. 7 days or less, or Reporting Credits From the Activities
b. 30 days or less and significant personal services If an activity meets any of the five exceptions listed above,
were provided in making the rental property available for it isn’t a rental activity. You must then determine:
customer use. 1. Whether your rental of the property is a trade or
Figure the average period of customer use for a class business activity (see Trade or Business Activities, later);
of property by dividing the total number of days in all rental and, if so,
periods by the number of rentals during the tax year. If the 2. Whether you materially participated in the activity
activity involves renting more than one class of property, for the tax year (see Material Participation, later).
multiply the average period of customer use of each class
by the ratio of the gross rental income from that class to • If the activity is a trade or business activity in which you
didn’t materially participate, enter the credits from the
the activity's total gross rental income. The activity's
activity on Worksheet 4, later.
average period of customer use equals the sum of these
class-by-class average periods weighted by gross • If the activity is a trade or business activity in which you
did materially participate, report the credits from the
income. See Regulations section 1.469-1(e)(3)(iii).
activity on the forms you normally use.
Significant personal services include only services
performed by individuals. To determine if personal If the rental activity didn’t meet any of the five
services are significant, all relevant facts and exceptions, it is generally a passive activity. Special rules
circumstances are considered. Facts and circumstances apply if you conduct the rental activity through a publicly
include the frequency of the services, the type and traded partnership (PTP). See Publicly Traded
amount of labor required to perform the services, and the Partnerships (PTPs), later.
value of the services relative to the amount charged for
If the rental activity isn’t conducted through a PTP, the
use of the property.
passive rental activity is entered in Worksheet 1, 2, 3, or 4.
2. Extraordinary personal services were provided in
making the rental property available for customer use. Worksheet 1 is for credits (other than rehabilitation
This applies only if the services are performed by credits and low-income housing credits) from passive
individuals and the customers' use of the rental property is rental real estate activities in which you actively
incidental to their receipt of the services. participated. See Special Allowance for Rental Real
3. Rental of the property is incidental to a nonrental Estate Activities, later.
activity. Worksheet 2 is for rehabilitation credits from passive
The rental of property is incidental to an activity of rental real estate activities and low-income housing
holding property for investment if the main purpose of credits for property placed in service before 1990. This

2 Instructions for Form 8582-CR (Rev. 12-2024)

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worksheet is also used for low-income housing credits           You may be treated as actively participating if, for 
from a partnership, S corporation, or other pass-through        example, you participated in making management 
entity if your interest in the pass-through entity was          decisions or arranging for others to provide services (such 
acquired before 1990, regardless of the date the property       as repairs) in a significant and bona fide sense. 
was placed in service.                                          Management decisions that may count as active 
                                                                participation include:
Worksheet 3 is for low-income housing credits for 
property placed in service after 1989 (unless held through      • Approving new tenants,
a pass-through entity in which you acquired your interest       • Deciding on rental terms,
before 1990).                                                   • Approving capital or repair expenditures, and
                                                                • Other similar decisions.
Worksheet 4 is for credits from passive trade or 
business activities in which you didn’t materially                The maximum special allowance is:
participate and passive rental real estate activities in        • $25,000 for single individuals and married individuals 
which you didn’t actively participate (but not rehabilitation   filing a joint return for the tax year.
credits from passive rental real estate activities or           • $12,500 for married individuals who file separate 
low-income housing credits).                                    returns for the tax year and who lived apart from their 
                                                                spouses at all times during the tax year.
Special Allowance for Rental Real Estate                        • $25,000 for a qualifying estate reduced by the special 
Activities                                                      allowance for which the surviving spouse qualified.
If you actively participated in a passive rental real estate    Modified adjusted gross income limitation.               If your 
activity, you may be able to claim credits from the activity    modified adjusted gross income (defined in the 
for the tax attributable to a special allowance of up to        instructions, later) is $100,000 or less ($50,000 or less if 
$25,000, reduced by any passive losses, including the           married filing separately), figure your credits based on the 
commercial revitalization deduction, allowed under this         amount of the maximum special allowance referred to in 
exception on Form 8582, Passive Activity Loss                   the preceding paragraph.
Limitations.
                                                                  If your modified adjusted gross income is more than 
The special allowance also applies to low-income                $100,000 ($50,000 if married filing separately) but less 
housing credits and rehabilitation credits from a rental real   than $150,000 ($75,000 if married filing separately), your 
estate activity, even if you didn’t actively participate in the special allowance is limited to 50% of the difference 
activity. The credits allowed under the special allowance       between $150,000 ($75,000 if married filing separately) 
are in addition to the credits allowed for the tax attributable and your modified adjusted gross income.
to net passive income.
                                                                  Generally, if your modified adjusted gross income is 
The special allowance isn’t available if you were               $150,000 or more ($75,000 or more if married filing 
married at the end of the year, are filing a separate return    separately), there is no special allowance.
for the year, and lived with your spouse at any time during 
the year.                                                         However, for low-income housing credits for property 
                                                                placed in service before 1990 and for rehabilitation 
Only an individual, a qualifying estate, or a qualified         credits, the limits on modified adjusted gross income are 
revocable trust that made an election to treat the trust as     increased. If your modified adjusted gross income is more 
part of the decedent's estate may actively participate in a     than $200,000 ($100,000 if married filing separately) but 
rental real estate activity. Unless future regulations provide  less than $250,000 ($125,000 if married filing separately), 
an exception, limited partners aren’t treated as actively       your special allowance is limited to 50% of the difference 
participating in a partnership's rental real estate activity.   between $250,000 ($125,000 if married filing separately) 
A qualifying estate is the estate of a decedent for tax         and your modified adjusted gross income.
years ending less than 2 years after the date of the              If your modified adjusted gross income is $250,000 or 
decedent's death if the decedent would have satisfied the       more ($125,000 or more if married filing separately), there 
active participation requirements for the rental real estate    is no special allowance.
activity for the tax year the decedent died.
                                                                  No modified adjusted gross income limitation applies 
A qualified revocable trust may elect to be treated as 
                                                                when figuring the special allowance for low-income 
part of a decedent's estate for purposes of the special 
                                                                housing credits for property placed in service after 1989 
allowance for active participation in rental real estate 
                                                                (other than from a pass-through entity in which you 
activities. The election must be made by both the executor 
                                                                acquired your interest before 1990).
(if any) of the decedent's estate and the trustee of the 
revocable trust. For details, see Regulations section           Trade or Business Activities
1.645-1.
                                                                A trade or business activity is an activity (other than a 
You aren’t considered to actively participate in a rental       rental activity or an activity treated as incidental to an 
real estate activity if at any time during the tax year your    activity of holding property for investment) that:
interest (including your spouse's interest) in the activity       1. Involves the conduct of a trade or business (within 
was less than 10% (by value) of all interests in the activity.  the meaning of section 162),
Active participation is a less stringent requirement than         2. Is conducted in anticipation of starting a trade or 
material participation (see Material Participation, later).     business, or

Instructions for Form 8582-CR (Rev. 12-2024)                                                                                     3

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3. Involves research or experimental expenditures materially participate under any of the material
deductible under section 174 (or that would be if you participation tests (other than this fourth test).
chose to deduct rather than capitalize them). 5. You materially participated in the activity for any 5
(whether or not consecutive) of the 10 immediately
Reporting Credits From the Activities preceding tax years.
Trade or business activities with material participa- 6. The activity is a personal service activity in which
tion. If you materially participated in a trade or business you materially participated for any 3 (whether or not
activity, the activity isn’t a passive activity. Report the consecutive) preceding tax years.
credits from the activity on the forms you normally use.
An activity is a personal service activity if it involves the
Trade or business activities without material partici- performance of personal services in the fields of health,
pation. If you didn’t materially participate in a trade or law, engineering, architecture, accounting, actuarial
business activity, the activity is a passive activity. science, performing arts, consulting, or in any other trade
Generally, you must use Worksheet 4, later, to figure the or business in which capital isn’t a material income-
amount to enter on Form 8582-CR for each trade or producing factor.
business activity in which you didn’t materially participate. 7. Based on all the facts and circumstances, you
However, if you held the activity through a PTP, special participated in the activity on a regular, continuous, and
rules apply. See Publicly Traded Partnerships (PTPs), substantial basis during the tax year.
later.
You didn’t materially participate in the activity under this
Material Participation seventh test, however, if you participated in the activity for
For the material participation tests that follow, participation 100 hours or less during the tax year.
generally includes any work done in connection with an Your participation in managing the activity doesn’t
activity if you owned an interest in the activity at the time count in determining whether you materially participated
you did the work. The capacity in which you did the work under this test if:
doesn’t matter. However, work isn’t participation if: a. Any person (except you) received compensation for
• It isn’t work that an owner would customarily do in the performing services in the management of the activity, or
same type of activity, and b. Any individual spent more hours during the tax year
• One of your main reasons for doing the work was to performing services in the management of the activity
avoid the disallowance of losses or credits from the than you did (regardless of whether the individual was
activity under the passive activity rules. compensated for the management services).
Proof of participation. You may prove your participation
in an activity by any reasonable means. You don’t have to Test for a spouse. Participation by your spouse during
maintain contemporaneous daily time reports, logs, or the tax year in an activity you own may be counted as your
similar documents if you can establish your participation participation in the activity, even if your spouse didn’t own
by other reasonable means. For this purpose, reasonable an interest in the activity and whether or not you and your
means include, but aren’t limited to, identifying services spouse file a joint return for the tax year.
performed over a period of time and the approximate Test for investors. Work done as an investor in an
number of hours spent performing the services during that activity isn’t treated as participation unless you were
period, based on appointment books, calendars, or directly involved in the day-to-day management or
narrative summaries. operations of the activity. For purposes of this test, work
Tests for individuals. You materially participated for the done as an investor includes:
tax year in an activity if you satisfy at least one of the 1. Studying and reviewing financial statements or
following tests. reports on operations of the activity,
1. You participated in the activity for more than 500 2. Preparing or compiling summaries or analyses of
hours. the finances or operations of the activity for your own use,
2. Your participation in the activity for the tax year was and
substantially all of the participation in the activity of all 3. Monitoring the finances or operations of the activity
individuals (including individuals who didn’t own any in a nonmanagerial capacity.
interest in the activity) for the year.
3. You participated in the activity for more than 100 Special rules for limited partners. If you were a limited
hours during the tax year, and you participated at least as partner in an activity, you generally didn’t materially
much as any other individual (including individuals who participate in the activity. You did materially participate in
didn’t own any interest in the activity) for the year. the activity, however, if you met material participation test
1, 5, or 6 (see Tests for individuals, earlier) for the tax year.
4. The activity is a significant participation activity for
the tax year, and you participated in all significant However, for purposes of the material participation
participation activities during the year for more than 500 tests, you aren’t treated as a limited partner if you also
hours. were a general partner in the partnership at all times
during the partnership's tax year ending with or within your
A significant participation activity is any trade or tax year (or, if shorter, during the portion of the
business activity in which you participated for more than partnership's tax year in which you directly or indirectly
100 hours during the year and in which you didn’t owned your limited partner interest).

4 Instructions for Form 8582-CR (Rev. 12-2024)

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Special rules for certain retired or disabled farmers a. The rental activity is insubstantial relative to the
and surviving spouses of farmers. Certain retired or trade or business activity or vice versa, or
disabled farmers and surviving spouses of farmers are b. Each owner of the trade or business activity has the
treated as materially participating in a farming activity if same proportionate ownership interest in the rental
the real property used in the activity meets the estate tax activity. If so, the portion of the rental activity involving the
rules for special valuation of farm property passed from a rental of property used in the trade or business activity
qualifying decedent. See Temporary Regulations section may be grouped with the trade or business activity.
1.469-5T(h)(2). 2. An activity involving the rental of real property with
Estates and trusts. The PAC limitations apply to an an activity involving the rental of personal property (except
estate or trust. See Temporary Regulations sections personal property provided in connection with the real
1.469-1T(b)(2) and (3). The rules for determining material property or vice versa).
participation for this purpose haven’t yet been issued. 3. Any activity with another activity in a different type of
business and in which you hold an interest as a limited
Grouping of Activities partner or as a limited entrepreneur if that other activity
Generally, one or more trade or business activities or engages in holding, producing, or distributing motion
rental activities may be treated as a single activity if the picture films or videotapes; farming; leasing section 1245
activities make up an appropriate economic unit for the property; or exploring for (or exploiting) oil and gas
measurement of gain or loss under the passive activity resources or geothermal deposits.
rules.
Activities conducted through partnerships, S corpo-
Whether activities make up an appropriate economic
rations, and C corporations subject to section 469.
unit depends on all the relevant facts and circumstances.
Once a partnership or corporation determines its activities
The factors given the greatest weight in determining
under these rules, a partner or shareholder may use these
whether activities make up an appropriate economic unit
rules to group those activities with:
are:
• Each other,
1. Similarities and differences in types of trades or • Activities conducted directly by the partner or
businesses, shareholder, or
2. The extent of common control, • Activities conducted through other partnerships and
3. The extent of common ownership, corporations.
4. Geographical location, and A partner or shareholder may not treat as separate
activities those activities grouped together by the
5. Interdependencies between or among the activities.
partnership or corporation.
Example. You have a significant ownership interest in a Partial disposition of an activity. You may treat the
bakery and a movie theater in Baltimore and in a bakery disposition of substantially all of an activity as a separate
and a movie theater in Philadelphia. Depending on all the activity if you can prove with reasonable certainty:
relevant facts and circumstances, there may be more than
one reasonable method for grouping your activities. For 1. The prior year unallowed losses, if any, allocable to
instance, the following groupings may or may not be the part of the activity disposed of; and
permissible. 2. The net income or loss for the year of disposition
• A single activity. allocable to the part of the activity disposed of.
• A movie theater activity and a bakery activity.
• A Baltimore activity and a Philadelphia activity. Disclosure Requirement
• Four separate activities. For tax years beginning after January 24, 2010, the
Once you choose a grouping under these rules, you following disclosure requirements for groupings apply. You
must continue using that grouping in later tax years unless are required to report certain changes to your groupings
a material change in the facts and circumstances makes it that occur during the tax year to the IRS. If you fail to
clearly inappropriate. report these changes, each trade or business activity or
rental activity will be treated as a separate activity. You will
The IRS may regroup your activities if your grouping be considered to have made a timely disclosure if you filed
fails to reflect one or more appropriate economic units and all affected income tax returns consistent with the claimed
one of the primary purposes of your grouping is to avoid grouping and make the required disclosure on the income
the passive activity limitations. tax return for the year in which you first discovered the
Regrouping due to net investment income tax. You failure to disclose. If the IRS discovered the failure to
may be able to regroup your activities if you’re subject to disclose, you must have reasonable cause for not making
the Net Investment Income Tax (NIIT) for the first time. For the required disclosure. For more information on
detailed information, see Pub. 925 and Regulations disclosure requirements, see Revenue Procedure
section 1.469-11(b)(3)(iv). 2010-13 available at IRS.gov/irb/
2010-04_IRB#RP-2010-13.
Limitation on grouping certain activities. The
following activities may not be grouped together. New grouping. You must file a written statement with
your original income tax return for the first tax year in
1. A rental activity with a trade or business activity
which two or more activities are originally grouped into a
unless the activities being grouped together make up an
single activity. The statement must provide the names,
appropriate economic unit and:

Instructions for Form 8582-CR (Rev. 12-2024) 5

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addresses, and employer identification numbers (EINs), if Form 3800, General Business Credit. Enter the credits
applicable, for the activities being grouped as a single from Form 3800, lines 2, 23, and 32, in column (a) of
activity. In addition, the statement must contain a Worksheet 1, 2, 3, or 4.
declaration that the grouped activities make up an
appropriate economic unit for the measurement of gain or Form 8834, Qualified Electric Vehicle Credit. See the
loss under the passive activity rules. Instructions for Form 8834 for the amount to enter in
column (a) of Worksheet 1 or 4.
Addition to an existing grouping. You must file a
written statement with your original income tax return for Prior Year Unallowed Credits
the tax year in which you add a new activity to an existing To figure this year's PAC, you must take into account any
group. The statement must provide the name, address, credits from passive activities disallowed for prior years
and EIN, if applicable, for the activity that is being added and carried forward to this year.
and for the activities in the existing group. In addition, the
statement must contain a declaration that the activities If you had only one type of prior year unallowed credit
make up an appropriate economic unit for the from a single passive activity, figure your prior year
measurement of gain or loss under the passive activity unallowed credit by subtracting line 37 of your prior year
rules. Form 8582-CR from line 5 of your prior year Form
8582-CR.
Regrouping. You must file a written statement with your
original income tax return for the tax year in which you Otherwise, your prior year unallowed credits are the
regroup the activities. The statement must provide the amounts shown in column (b) of Worksheet 9 in the prior
names, addresses, and EINs, if applicable, for the year Instructions for Form 8582-CR. Enter the prior year
activities that are being regrouped. If two or more activities unallowed credits in column (b) of Worksheet 1, 2, 3, or 4,
are being regrouped into a single activity, the statement whichever applies.
must contain a declaration that the regrouped activities You must adjust a prior year unallowed credit if
make up an appropriate economic unit for the ! you had to recapture any part of the credit (for
measurement of gain or loss under the passive activity CAUTION example, due to the early disposition of property)
rules. In addition, the statement must contain an or transfer the credit to a bankruptcy estate.
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 Part I—Passive Activity Credits
clearly inappropriate. Use Part I to combine your credits from passive activities
to determine if you have a PAC for the current year.
Dispositions
If your credits from all passive activities exceed the tax
Unallowed PACs, unlike unallowed passive activity losses, attributable to net passive income, you have a PAC for the
aren’t allowed when you dispose of your interest in an current year. Generally, you have net passive income if
activity. However, you may elect to increase the basis of line 3 of Form 8582 shows income. For more information,
the credit property by the amount of the original basis see the instructions for Form 8582-CR, line 6.
reduction of the property to the extent that the credit hasn’t
been allowed under the passive activity rules. Unallowed Lines 1a through 1c. Individuals and qualifying estates
PACs that aren’t used to increase the basis of the credit that actively participated in rental real estate activities
property are carried forward until they are allowed. To must include the credits (other than rehabilitation credits
make the election, complete Form 8582-CR, Part VI. No or low-income housing credits) from these activities on
basis adjustment may be elected on a partial disposition lines 1a through 1c. Use Worksheet 1 to figure the
of your interest in a passive activity. amounts to enter on lines 1a and 1b.
See Part II—Special Allowance for Rental Real Estate
Activities With Active Participation, later.
Specific Instructions
If you are married filing a separate return and lived
Current Year Credits ! with your spouse at any time during the year, even
Convert any current year qualified expenditures into CAUTION if you actively participated in the rental real estate
credits before beginning Worksheet 1, 2, 3, or 4. If the activity, include the credits in Worksheet 4, not in
credits are from more than one activity or are of more than Worksheet 1.
one type, separate the credits by activity and by type
before making entries in the worksheets. Note. You may take credits that arose in a prior tax year
(other than low-income housing and rehabilitation credits)
For tax years beginning after 2024, line numbers
under the special allowance only if you actively
! on the referenced forms may change. See the participated in the rental real estate activity for both that
CAUTION form instructions for the referenced forms on how
prior year and this year. If you didn’t actively participate for
to report the current year passive activity credit.
both years, include the credits in Worksheet 4, not in
Example. You have a low-income housing credit from Worksheet 1.
one activity and a research credit from a different activity. Lines 2a through 2c. Individuals (including limited
Enter the low-income housing credit in column (a) of partners) and qualifying estates who had rehabilitation
Worksheet 2 or 3 and make a separate entry for the credits from rental real estate activities or low-income
research credit in column (a) of Worksheet 4. housing credits for property placed in service before 1990

6 Instructions for Form 8582-CR (Rev. 12-2024)

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must include the credits from those activities on lines 2a income, you must figure the tax on the net passive
through 2c. Use Worksheet 2 to figure the amounts to income. If you have an overall loss on an entire disposition
enter on lines 2a and 2b. of your interest in a passive activity, reduce net passive
If you have low-income housing credits for property income, if any, on Form 8582, line 3, to the extent of the
placed in service after 1989, include those credits in loss (but not below zero) and use only the remaining net
Worksheet 3 instead of Worksheet 2. If you held an passive income in the computation below. If you had a net
indirect interest in the property through a partnership, S passive activity loss, enter -0- on line 6 and go to line 7.
corporation, or other pass-through entity, use Worksheet 3 Figure the tax on net passive income as follows.
only if you also acquired your interest in the pass-through
entity after 1989. A. Taxable income including net
passive income . . . . . . . . . .
Lines 3a through 3c. Individuals (including limited
B. Tax on line A* . . . . . . . . . . . . . . . . . . . . .
partners) and qualifying estates who had low-income
housing credits from rental real estate activities for C. Taxable income without net passive
property placed in service after 1989 must include those income . . . . . . . . . . . . . . .
credits on lines 3a through 3c. If you held an indirect D. Tax on line C* . . . . . . . . . . . . . . . . . . . . . .
interest in the property through a partnership, S E. Subtract line D from line B and enter the result on
corporation, or other pass-through entity, use lines 3a Form 8582-CR, line 6 . . . . . . . . . . . . . . . . .
through 3c only if you also acquired your interest in the * For Form 1040 or 1040-SR, use the Tax Table, Tax Computation Worksheet, or
pass-through entity after 1989. Use Worksheet 3 to figure other appropriate method you used to figure your tax. For Form 1041, use the Tax
the amounts to enter on lines 3a and 3b. Rate Schedule, Qualified Dividends Tax Worksheet, or Schedule D, whichever
applies.
Include the credits in Worksheet 4, but not in
! Worksheet 2 or 3, if you are married filing a
CAUTION separate return and lived with your spouse at any
time during the year. Note. When using taxable income in the above
computation, it isn’t necessary to refigure items that are
Lines 4a through 4c. Individuals must include on lines based on a percentage of adjusted gross income.
4a through 4c credits from passive activities that weren’t
Line 7. If line 7 is zero because the tax on the net passive
entered on Worksheets 1, 2, or 3. Trusts must include
income on line 6 is greater than your credits from passive
credits from all passive activities in Worksheet 4. Use
activities on line 5, all your credits from passive activities
Worksheet 4 to figure the amounts to enter on lines 4a and
are allowed. In this case, enter the amount from line 5 on
4b.
line 37 and report the credits on the forms normally used.
Line 6. If Form 8582, line 3, shows net income or you Don’t complete Worksheets 5 through 9.
didn’t complete Form 8582 because you had net passive

Worksheet 1 for Lines 1a and 1b Keep for Your Records
Lines 1a and 1b. Use Worksheet 1 to figure 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 definition 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.
Current Year Credits Prior Year Unallowed
Name of Activity From Form Credits Total Credits
(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 . . . . . . . . . . . . . . . . .

Instructions for Form 8582-CR (Rev. 12-2024) 7

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Worksheet 2 for Lines 2a and 2b Keep for Your Records
Lines 2a and 2b. Use Worksheet 2 to figure 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.
Current Year Credits Prior Year Unallowed
Name of Activity From Form Credits Total Credits
(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 . . . . . . . . . . . . . . . . .

Worksheet 3 for Lines 3a and 3b Keep for Your Records
Lines 3a and 3b. Use Worksheet 3 to figure 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.
Current Year Credits Prior Year Unallowed
Name of Activity From Form Credits Total Credits
(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 . . . . . . . . . . . . . . . . .

Worksheet 4 for Lines 4a and 4b Keep for Your Records
Lines 4a and 4b. Use Worksheet 4 to figure 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.
Current Year Credits Prior Year Unallowed
Name of Activity From Form Credits Total Credits
(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 . . . . . . . . . . . . . . . . .

8 Instructions for Form 8582-CR (Rev. 12-2024)

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nonpassive loss only to the extent that it exceeds that net
Part II—Special Allowance for Rental passive income.
Real Estate Activities With Active Line 12. Don’t enter more than $12,500 on line 12 if you
are married filing a separate return and you and your
Participation spouse lived apart at all times during the year. Married
Married persons filing separate returns who lived persons filing separate returns who lived with their
spouses at any time during the year aren’t eligible for the
CAUTION aren’t eligible to complete Part II.
! with their spouses at any time during the year special allowance. They must enter -0- on line 16 and go
to line 17.
Use Part II to figure the credit allowed if you have any
credits from rental real estate activities in which you Line 15. Figure the tax attributable to the amount on
actively participated (other than rehabilitation credits and line 14 as follows.
low-income housing credits). See Rental Activities, earlier,
Note. When using taxable income in the computation
for details.
below, it isn’t necessary to refigure items that are based
Line 9. Married persons filing separate returns who lived on a percentage of adjusted gross income.
apart from their spouses at all times during the year must
enter $75,000 on line 9 instead of $150,000. Married A. Taxable income . . . . . . . . . . . . .
persons filing separate returns who lived with their B. Tax on line A*. . . . . . . . . . . . . . . . . . . . . . .
spouses at any time during the year aren’t eligible for the
special allowance. They must enter -0- on line 16 and go C. Enter amount from Form 8582-CR,
line 14 . . . . . . . . . . . . . . . . . . .
to line 17.
D. Subtract line C from line A . . . . . . .
Line 10. To figure modified adjusted gross income,
E. Tax on line D*. . . . . . . . . . . . . . . . . . . . . . .
combine all the amounts used to figure adjusted gross
income, except don’t take into account: F. Subtract line E from line B and enter the result on Form
• Any passive activity loss as defined in section 469(d) 8582-CR, line 15 . . . . . . . . . . . . . . . . . . . . .
(1), * For Form 1040 or 1040-SR, use the Tax Table, Tax Computation Worksheet, or
• Any rental real estate loss allowed to real estate other appropriate method you used to figure your tax. For Form 1041, use the Tax
professionals (defined under Activities That Aren’t Passive Rate Schedule, Qualified Dividends Tax Worksheet, or Schedule D, whichever
Activities, earlier), applies.
• The taxable amount of social security and tier 1 railroad
retirement benefits,
• Deductible contributions to traditional individual
retirement accounts (IRAs) and section 501(c)(18)
pension plans, Part III—Special Allowance for
• The deduction allowed for self-employment taxes, Rehabilitation Credits From Rental
• The exclusion from income of interest from series EE
and I U.S. savings bonds used to pay higher education Real Estate Activities and
expenses, Low-Income Housing Credits for
• The exclusion of amounts received under an employer's
adoption assistance program, Property Placed in Service Before
• The student loan interest deduction, 1990 (or From Pass-Through Interests
• The tuition and fees deduction, or
• Foreign-derived intangible income and global intangible Acquired Before 1990)
low-taxed income. Married persons filing separate returns who lived
Include in modified adjusted gross income any portfolio ! with their spouses at any time during the year
income and expenses that are clearly and directly CAUTION aren’t eligible to complete Part III.
allocable to portfolio income. Also include any income that
Use Part III to figure the credit allowed if you have any
is treated as nonpassive income, such as overall gain from
rehabilitation credits or low-income housing credits for
a PTP and net income from an activity or item of property
property placed in service before 1990. Also use this part
subject to the recharacterization of passive income rules.
if your low-income housing credit is from a partnership, S
For information on recharacterization of income, see Pub.
corporation, or other pass-through entity in which you
925 or Temporary Regulations section 1.469-2T(f).
acquired your interest before 1990, regardless of the date
When figuring modified adjusted gross income, any the property was placed in service.
overall loss from an entire disposition of an interest in a
passive activity is taken into account as a nonpassive loss Line 21. Married persons filing separate returns who
if you don’t have any net passive income after combining lived apart from their spouses at all times during the year
net income and losses from all other passive activities must enter $125,000 on line 21, instead of $250,000.
(that is, Form 8582, line 3 is a loss or zero). If you do have Skip lines 21 through 26 if you completed Part II of this
net passive income when you combine the net losses and form and your modified adjusted gross income on line 10
net income from all other passive activities, the overall was $100,000 or less ($50,000 or less if married filing
loss from the disposition is taken into account as a separately and you lived apart from your spouse for the

Instructions for Form 8582-CR (Rev. 12-2024) 9

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entire year). Instead, enter the amount from line 15 on                           A. Taxable income    . . . . . . . . . . . . . . . .                  
line 27.                                                                          B. Tax on line A*  . . . . . . . . . . . . . . . . . . . . . . . .                
Line 24. Don’t enter more than $12,500 on line 24 if you                          C. Enter $25,000 ($12,500 if married 
are married filing a separate return and lived apart from                            filing a separate return and you 
your spouse for the entire year.                                                     and your spouse lived apart at all 
                                                                                     times during the year) . . . . .                     
Line 27. Figure the tax attributable to the amount on 
                                                                                  D. Enter amount, if any, from Form 
line 26 as follows.                                                                  8582, line 10 . . . . . . . . . .                    
                                                                                  E. Enter the amount, if any, from 
A. Taxable income    . . . . . . . . . . . . .                                       Form 8582, line 14  . . . . . . .                    
B. Tax on line A*  . . . . . . . . . . . . . . . . . . . . . .                    F. Subtract lines D and E from line C . . . . . .                     
C. Enter amount from Form 8582-CR,                                                G. Subtract line F from line A   . . . . . . . . . .                  
   line 26 . . . . . . . . . . . . . . . . . . .                
                                                                                  H. Tax on line G*  . . . . . . . . . . . . . . . . . . . . . . . .                
D. Subtract line C from line A   . . . . . . .                  
                                                                                  I. Subtract line H from line B   . . . . . . . . . . . . . . . . .                
E. Tax on line D*  . . . . . . . . . . . . . . . . . . . . . .                    
                                                                                  J. Add lines 16 and 30 of Form 8582-CR and enter the 
F. Subtract line E from line B and enter the result on Form                          total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              
   8582-CR, line 27    . . . . . . . . . . . . . . . . . . . .                    
                                                                                  K. Tax attributable to the remaining special allowance. 
* For Form 1040 or 1040-SR, use the Tax Table, Tax Computation Worksheet, or         Subtract line J from line I. Enter the result on Form 
other appropriate method you used to figure your tax. For Form 1041, use the Tax     8582-CR, line 35 . . . . . . . . . . . . . . . . . . . . . . .                 
Rate Schedule, Qualified Dividends Tax Worksheet, or Schedule D, whichever 
applies.                                                                          * 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.
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.                                   Note.   When using taxable income in the above 
                                                                                  computation, it isn’t necessary to refigure items that are 
Part IV—Special Allowance for                                                     based on a percentage of adjusted gross income.
Low-Income Housing Credits for 
                                                                                  Part V—Passive Activity Credit 
Property Placed in Service After 1989
                                                                                  Allowed
         Married persons filing separate returns who lived 
                                                                                  Use Part V to figure the PAC (as determined in Part I) that 
!        with their spouses at any time during the year                           is allowed for the current year for all passive activities.
CAUTION  aren’t eligible to complete Part IV.
                                                                                  Line 37. If you have only one type of credit, the amount 
Use Part IV to figure the credit allowed if you have any                          on line 37 is the credit allowed for the year. Enter this 
low-income housing credits for property placed in service                         amount on the form where it is normally reported. See 
after 1989. If you held an indirect interest in the property                      Reporting Allowed Credits on Your Tax Return, later. Your 
through a partnership, S corporation, or other                                    unallowed credit is line 5 minus line 37.
pass-through entity, use Part IV only if your interest in the 
pass-through entity was also acquired after 1989.                                 Use Worksheets 5 through 9, whichever apply, to 
                                                                                  allocate the allowed and unallowed credits if you have 
Line 35. Figure the tax attributable to the remaining                             credits from more than one activity. Also use the 
special allowance as follows.                                                     worksheets if you have more than one type of credit.
                                                                                  Keep a record of each unallowed credit and the activity 
                                                                                  to which it belongs so you may claim the credit if it 
                                                                                  becomes allowable in a future year.

                                                                                  Reporting Allowed Credits on Your Tax Return
                                                                                          For tax years beginning after 2024, line numbers 
                                                                                  !       on the referenced forms may change. See the 
                                                                                  CAUTION 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.

10                                                                                                 Instructions for Form 8582-CR (Rev. 12-2024)

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Worksheet 5 for Credits on Line 1a or 1b                                                                                  Keep for Your Records
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.
Name of Activity                            Form To Be                                             (a) Credits (b) Ratios (c) Special (d) Subtract 
                                            Reported on                                                                   Allowance   column (c) from 
                                                                                                                                      column (a)

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1.00

Worksheet 6 for Credits on Line 2a or 2b                                                                                  Keep for Your Records
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.
Name of Activity                            Form To Be                                             (a) Credits (b) Ratios (c) Special (d) Subtract 
                                            Reported on                                                                   Allowance   column (c) from 
                                                                                                                                      column (a)

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1.00

Instructions for Form 8582-CR (Rev. 12-2024)                                                                                                                       11

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Worksheet 7 for Credits on Line 3a or 3b                                                                                                        Keep for Your Records
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.
Name of Activity                               Form To Be                                          (a) Credits                   (b) Ratios     (c) Special (d) Subtract 
                                               Reported on                                                                                      Allowance   column (c) from 
                                                                                                                                                            column (a)

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                1.00

Worksheet 8 – Allocation of Unallowed Credits                                                                                                   Keep for Your Records
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 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). 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.
Name of Activity                               Form To Be                                          (a) Credits                        (b) Ratios (c) Unallowed Credits
                                               Reported on

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                              1.00

12                                                                                                                               Instructions for Form 8582-CR (Rev. 12-2024)

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Worksheet 9 – Allowed Credits Keep for Your Records
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.
Name of Activity Form To Be (a) Credits (b) Unallowed Credits (c) Allowed Credits
Reported on

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Publicly Traded Partnerships (PTPs) Computation of Allowed Passive Activity Credits
A PTP is a partnership whose interests are traded on an From PTPs
established securities market or are readily tradable on a Complete Steps 1 and 2 only if you have net passive
secondary market (or its substantial equivalent). income from a PTP with passive activity credits (including
prior year unallowed credits).
An established securities market includes any national
securities exchange and any local exchange registered Step 1. Figure the tax attributable to net passive income
under the Securities Exchange Act of 1934 or exempted from each PTP with passive activity credits (including prior
from registration because of the limited volume of year unallowed credits) by following the steps shown in
transactions. It also includes any over-the-counter market. the worksheet in the line 6 instructions. Complete a
separate tax computation for each PTP with net passive
A secondary market generally exists if a person stands
income.
ready to make a market in the interest. An interest is
treated as readily tradable if the interest is regularly Step 2. Passive activity credits from each PTP are
quoted by persons, such as brokers or dealers, who are allowed to the extent of the tax attributable to net passive
making a market in the interest. income from the same PTP. Credits in excess of the tax
attributable to net passive income may be allowed under
The substantial equivalent of a secondary market exists
one or more steps below.
if there is no identifiable market maker, but holders of
interests have a readily available, regular, and ongoing Complete Steps 3 through 5 only if your passive activity
opportunity to sell or exchange their interests through a credits (including prior year unallowed credits) include
public means of obtaining or providing information on rehabilitation credits from rental real estate activities from
offers to buy, sell, or exchange interests. Similarly, the PTPs, low-income housing credits for property placed in
substantial equivalent of a secondary market exists if service before 1990 from PTPs, or low-income housing
prospective buyers and sellers have the opportunity to credits from PTPs in which you acquired your interest
buy, sell, or exchange interests in a timeframe and with the before 1990 (regardless of the date placed in service).
regularity and continuity that the existence of a market Step 3. Reduce rehabilitation credits from rental real
maker would provide. estate activities from each PTP, low-income housing
credits for property placed in service before 1990 from
Credits From PTPs each PTP, and any low-income housing credits (including
A credit from a passive activity held through a PTP is prior year unallowed credits) from each PTP in which you
allowed to the extent of the tax attributable to net passive acquired your interest before 1990 (regardless of the date
income from that partnership. In addition, rehabilitation placed in service) to the extent of the tax, which was
credits and low-income housing credits from rental real figured in Step 1, attributable to net passive income from
estate activities held through PTPs are allowed to the that PTP.
extent of any special allowance that remains after taking
into account losses and credits from rental real estate Step 4. Before beginning this step, complete Form
activities not owned through PTPs. See Part II—Special 8582-CR if you have any passive credits that aren’t from
Allowance for Rental Real Estate Activities With Active PTPs. Subtract the total of lines 16, 30, and 36, if any, of
Participation, earlier. Form 8582-CR from the amount on line 27 of Form
8582-CR to figure the tax attributable to the special
Don’t enter credits from PTPs on the worksheets allowance available for the credits in Step 3.
! or on Form 8582-CR. Instead, use the following If your only passive credits are from PTPs, complete
CAUTION steps to figure the allowed and unallowed credits
lines 21 through 27 of Form 8582-CR as a worksheet. The
from passive activities held through PTPs.

Instructions for Form 8582-CR (Rev. 12-2024) 13

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amount on line 27 is the tax attributable to the special Line 38. Check the box if you elect to increase the basis
allowance available for the credits in Step 3. of credit property used in a passive activity by the
Step 5. Rehabilitation credits from rental real estate unallowed credit that reduced the property's basis. The
activities of PTPs, low-income housing credits for property election is available for a fully taxable disposition of an
placed in service before 1990 by PTPs, and low-income entire interest in an activity for which a basis adjustment
housing credits from PTPs in which you acquired your was made as a result of placing in service property for
interest before 1990 (regardless of the date placed in which a credit was taken. You may elect to increase the
service) allowed under the special allowance are the basis of the credit property immediately before the
smaller of the total credits from Step 3 or the amount disposition (by an amount no greater than the amount of
figured in Step 4. If Step 4 is smaller than Step 3, allocate the original basis reduction) to the extent that the credit
the amount in Step 4 pro rata to the credits from each PTP hadn’t been allowed previously because of the passive
in Step 3. activity credit limitations. The amount of the unallowed
credit that may be applied against tax is reduced by the
Complete Steps 6 through 8 only if you have
amount of the basis adjustment.
low-income housing credits (including prior year
unallowed credits) for property placed in service after No basis adjustment may be elected on a partial
1989 from a PTP in which you acquired your interest after disposition of your interest in a passive activity or if the
1989. disposition isn’t fully taxable. The amount of any
unallowed credit, however, remains available to offset the
Step 6. Reduce low-income housing credits (including tax attributable to net passive income.
prior year unallowed credits) for property placed in service
after 1989 from each PTP in which you also acquired your Paperwork Reduction Act Notice. We ask for the
interest after 1989 to the extent of the tax attributable to information on this form to carry out the Internal Revenue
net passive income from that PTP, which was figured in laws of the United States. You are required to give us the
Step 1. information. We need it to ensure that you are complying
Step 7. Before beginning this step, complete Form with these laws and to allow us to figure and collect the
8582-CR if you have any passive credits that aren’t from right amount of tax.
PTPs. Subtract the sum of the credits allowed in Step 5 You aren’t required to provide the information requested
above and Form 8582-CR, line 36, from the amount on on a form that is subject to the Paperwork Reduction Act
Form 8582-CR, line 35, to figure the tax attributable to the unless the form displays a valid OMB control number.
special allowance available for the credits in Step 6. Books or records relating to a form or its instructions must
If your only passive credits are from PTPs, complete the be retained as long as their contents may become
steps shown in the worksheet in the line 35 instructions. material in the administration of any Internal Revenue law.
Subtract the credits allowed in Step 5 above from the tax Generally, tax returns and return information are
figured on line K of that worksheet. The result is the tax confidential, as required by section 6103.
attributable to the special allowance available for the
credits in Step 6. The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
Step 8. Low-income housing credits allowed under the burden for individual taxpayers filing this form is approved
special allowance for property placed in service after 1989 under OMB control number 1545-0074 and is included in
from a PTP in which you also acquired your interest after the estimates shown in the instructions for their individual
1989 are the smaller of the total credits from Step 6 or the income tax return. The estimated burden for all other
amount figured in Step 7. If Step 7 is smaller than Step 6, taxpayers who file this form is shown below.
allocate the amount in Step 7 pro rata to the credits from
each PTP in Step 6. Recordkeeping. . . . . . . . . . . . . . . . 2 hr., 4 min.
Step 9. Add the credits from Steps 2, 5, and 8. These are Learning about the law or the
the total credits allowed from passive activities of PTPs. form. . . . . . . . . . . . . . . . . . . . . . . . 6 hr., 4 min.
Step 10. Figure the allowed and unallowed credits from Preparing the form. . . . . . . . . . . . . 4 hr., 19 min.
each PTP. Report the allowed credits on the forms
normally used. Keep a record of the unallowed credits to Copying, assembling, and sending
be carried forward to next year. the form to the IRS. . . . . . . . . . . . . 1 hr., 9 min.

Part VI—Election To Increase Basis of
If you have suggestions for making this form simpler,
Credit Property we would be happy to hear from you. See the instructions
Complete Part VI if you disposed of your entire interest in for the tax return with which this form is filed.
a passive activity and elect to increase the basis of the
credit property used in the activity by the unallowed credit
that reduced the basis of the property.

14 Instructions for Form 8582-CR (Rev. 12-2024)

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