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Department of the Treasury
Internal Revenue Service

2023 Instructions for Schedule E
Use Schedule E (Form 1040) to report income or loss from rental real estate, royalties,
Supplemental partnerships, S corporations, estates, trusts, and residual interests in REMICs.
You can attach your own schedule(s) to report income or loss from any of these
Income and Loss sources. Use the same format as on Schedule E.
Enter separately on Schedule E the total income and the total loss for each part. En-
close loss figures in (parentheses).

Section references are to the Internal Revenue Code unless found in the Shareholder’s Instructions for Schedule K-1 (Form
otherwise noted. 1120-S).
Future Developments
For the latest information about developments related to Sched- General Instructions
ule E (Form 1040) and its instructions, such as legislation enac-
ted after they were published, go to IRS.gov/ScheduleE. Other Schedules and Forms You May Have
To File
• Schedule A (Form 1040) to deduct interest, taxes, and
casualty losses not related to your business.
What's New Form 461 to report an excess business loss.
•
Standard mileage rate. The standard mileage rate for miles • Form 941 to report the employer share and employee
driven in connection with your rental activities increased to share of social security tax and Medicare tax, withheld federal
65.5 cents a mile for 2023. income tax, and, if applicable, withheld Additional Medicare
Business meals expense. The temporary 100% deduction for Tax.
food or beverages provided by a restaurant has expired. The • Form 944 for smallest employers (those whose annual
business meal deduction reverts back to the previous 50% al- liability for social security, Medicare, and withheld federal
lowable deduction beginning January 1, 2023. See Line 6 , later, income taxes is $1,000 or less) to file and pay these taxes only
for more information. once a year instead of every quarter.
• Form 1041 to report information for estates and trusts.
• Form 3520 to report certain transactions with foreign
trusts and receipt of certain large gifts or bequests from certain
Reminders foreign persons.
Form 7205, Energy Efficient Commercial Buildings Deduc- • Form 4562 to claim depreciation and amortization
tion. This form and its separate instructions are used to claim (including information on listed property) on assets placed in
the section 179D deduction for the cost of energy efficient service in 2023, to claim amortization that began in 2023, to
commercial building property and energy efficient building ret- make an election under section 179 to expense certain property,
rofit property placed in service during the tax year. or to report information on listed property.
Excess business loss limitation. If you report a loss on • Form 4684 to report a casualty or theft gain or loss
line 26, 32, 37, or 39 of your Schedule E (Form 1040), you involving property used in your trade or business or
may be subject to a business loss limitation. The disallowed income-producing property.
loss resulting from the limitation will not be reflected on • Form 4797 to report sales, exchanges, and involuntary
line 26, 32, 37, or 39 of your Schedule E. Instead, use Form conversions (not from a casualty or theft) of trade or business
461 to determine the amount of your excess business loss, property.
which will be included as income on Schedule 1 (Form 1040), • Form 6198 to apply a limitation to your loss from an
line 8p. Any disallowed loss resulting from this limitation will at-risk activity.
be treated as a net operating loss that must be carried forward • Form 7203 to figure potential limitations of your share of
and deducted in a subsequent year. the S corporation's deductions, credits, and other items that can
be deducted on your return.
See Form 461 and its instructions for details on the excess Form 7205 to claim the deduction for the cost of energy
business loss limitation. •
efficient commercial building property and energy efficient
Figuring a shareholder’s stock and debt basis. See Form building retrofit property placed in service during the tax year.
7203 and its separate instructions, which have been developed • Form 8082 to notify the IRS of any inconsistent tax
to replace the 3-part Worksheet for Figuring a Shareholder’s treatment for an item on your return.
Stock and Debt Basis and its related instructions formerly • Form 8582 to apply a limitation to your loss from passive
activities.

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• Form 8824 to report like-kind exchanges. as separate properties on line 1 of Schedule E. On lines 3
• Form 8826 to claim a credit for expenditures to improve through 22 for each separate property interest, you must enter
access to your business for individuals with disabilities. your share of the applicable income, deduction, or loss.
• Form 8873 to figure your extraterritorial income If you have more than three rental real estate or royalty
exclusion. properties, complete and attach as many Schedules E as you
• Form 8960 to pay Net Investment Income Tax on certain need to list them. But fill in lines 23a through 26 on only one
income from your rental and other passive activities. Schedule E. The figures on lines 23a through 26 on that Sched-
• Form 8990 to determine whether your business interest ule E should be the combined totals for all properties reported
deduction is limited. on your Schedules E.
• Form 8995 or 8995-A to claim a deduction for qualified
Once made, the election can be revoked only with the per-
business income.
mission of the IRS. However, the election technically remains
Single-member limited liability company (LLC). In most in effect only for as long as the spouses filing as a QJV contin-
cases, a single-member domestic LLC is not treated as a sepa- ue to meet the requirements to be treated as a QJV. If the spou-
rate entity for federal income tax purposes. If you are the sole ses fail to meet the QJV requirements for a year, a new election
member of a domestic LLC, file Schedule E (or Schedule C or will be necessary for any future year in which the spouses meet
F, if applicable). However, you can elect to treat a domestic the requirements to be treated as a QJV.
LLC as a corporation. See Form 8832 for details on the elec-
Rental real estate income is generally not included in net
tion and the tax treatment of a foreign LLC.
earnings from self-employment subject to self-employment tax
Information returns. You may have to file information re- and is generally subject to passive loss limitation rules. Elect-
turns for wages paid to employees, certain payments of fees ing QJV status does not alter the application of the self-em-
and other nonemployee compensation, interest, rents, royalties, ployment tax or the passive loss limitation rules.
real estate transactions, annuities, and pensions. For details, see
For more information on QJVs, go to IRS.gov/QJV.
Line A, later, and the 2023 General Instructions for Certain In-
formation Returns. Reportable Transaction Disclosure
If you received cash of more than $10,000 in one or more Statement
related transactions in your trade or business, you may have to
Use Form 8886 to disclose information for each reportable
file Form 8300. For details, see Pub. 1544.
transaction in which you participated. Form 8886 must be filed
Qualified Joint Venture (QJV) for each tax year that your federal income tax liability is affec-
ted by your participation in the transaction. You may have to
If you and your spouse each materially participate (see Materi-
pay a penalty if you are required to file Form 8886 but do not
al participation in the Instructions for Schedule C) as the only
do so. You may also have to pay interest and penalties on any
members of a jointly owned and operated rental real estate
reportable transaction understatements. The following are re-
business and you file a joint return for the tax year, you can
portable transactions.
elect to be treated as a QJV instead of a partnership. This elec-
tion, in most cases, will not increase the total tax owed on the • Any listed transaction that is the same as or substantially
similar to tax avoidance transactions identified by the IRS.
joint return. By making the election, you will not be required to
file Form 1065 for any year the election is in effect and will in- • Any transaction offered to you or a related party under
conditions of confidentiality for which you paid an advisor a
stead report the income and deductions directly on your joint
fee of at least $50,000 for individuals or $250,000 for partner-
return. If you and your spouse filed Form 1065 for the year pri-
ships and trusts. See the Instructions for Form 8886.
or to the election, the partnership terminates at the end of the
tax year immediately preceding the year the election takes ef- • Certain transactions for which you or a related party have
contractual protection against disallowance of the tax benefits.
fect.
• Certain transactions resulting in a loss of at least $2 mil-
Note. Mere joint ownership of property that is not a trade or lion in any single tax year or $4 million in any combination of
business does not qualify for the election. tax years (at least $50,000 for a single tax year if the loss arose
from a foreign currency transaction defined in section 988(c)
Only businesses that are owned and operated by spou- (1), whether or not the loss flows through from an S corpora-
! ses as co-owners (and not in the name of a state law tion or partnership).
CAUTION entity) qualify for the election. Thus, a business owned
• Certain transactions of interest entered into that are the
and operated by spouses through an LLC does not qualify for same as or substantially similar to transactions that the IRS has
the election of a QJV. identified by notice, regulation, or other form of published
Making the election. To make this election for your rental re- guidance as transactions of interest.
al estate business, check the “QJV” box on line 2 for each See the Instructions for Form 8886 for more details.
property that is part of the QJV. You must divide all items of
income, gain, loss, deduction, and credit attributable to the Limitation on Losses
rental real estate business between you and your spouse in ac- If you report a loss from rental real estate or royalties in Part I,
cordance with your respective interests in the venture. Al- a loss from a partnership or S corporation in Part II, or a loss
though you and your spouse will not each file your own Sched- from an estate or trust in Part III, your loss may be reduced or
ule E as part of the QJV, each of you must report your interest

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not allowed this year. You must apply the following rules to Qualified nonrecourse financing. Qualified nonrecourse fi-
your loss. nancing is treated as an amount at risk if it is secured by real
• Basis rules apply to losses from a partnership or S property used in an activity of holding real property subject to
corporation. See Basis rules for partnerships and Basis rules the at-risk rules. Qualified nonrecourse financing is financing
for S corporations, later, in Part II. for which no one is personally liable for repayment and is:
• At-risk rules apply to losses from rental real estate or Borrowed by you in connection with the activity of hold-
•
royalties. They also apply to losses from a partnership, S ing real property (other than mineral property);
corporation, estate, or trust. See At-Risk Rules, later, in the Not convertible from a debt obligation to an ownership
•
General Instructions. If the loss is from a partnership or S interest; and
corporation, also see At-risk rules, later, in Part II. Loaned or guaranteed by any federal, state, or local gov-
•
• Passive activity loss rules apply to losses from rental real ernment, or borrowed by you from a qualified person.
estate. They also apply to losses from a partnership, S
corporation, estate, or trust. See Passive Activity Loss Rules, Qualified person. A qualified person is a person who ac-
later, in the General Instructions. If the loss is from a tively and regularly engages in the business of lending money,
partnership or S corporation, also see Passive activity loss such as a bank or savings and loan association. A qualified per-
rules, later, in Part II. son cannot be:
• Excess business loss rules apply to losses from all • Related to you (unless the nonrecourse financing obtained
noncorporate trades or businesses. This loss limitation is is commercially reasonable and on substantially the same terms
figured using Form 461 after you complete your Schedule E. as loans involving unrelated persons),
Any limitation to your loss resulting from these rules will not • The seller of the property (or a person related to the sell-
be reflected on your Schedule E. Instead, it will be included as er), or
income on Schedule 1 (Form 1040), line 8p, and treated as a • A person who receives a fee due to your investment in re-
net operating loss that must be carried forward and deducted in al property (or a person related to that person).
a subsequent year. These rules also apply to losses from a More information. For more details about the at-risk rules,
partnership or S corporation. see the Instructions for Form 6198 and Pub. 925.
At-Risk Rules Passive Activity Loss Rules
In most cases, you must complete Form 6198 to figure your The passive activity loss rules may limit the amount of losses
loss if you have: you can deduct. These rules apply to losses in Parts I, II, and
• A loss from an activity carried on as a trade or business III, and line 40 of Schedule E.
or for the production of income, and
Losses from passive activities may be subject first to the
• Amounts in the activity for which you are not at risk.
at-risk rules. Losses deductible under the at-risk rules are then
The at-risk rules in most cases limit the amount of loss (in- subject to the passive activity loss rules.
cluding loss on the disposition of assets) you can claim to the
You can deduct losses from passive activities in most cases
amount you could actually lose in the activity. However, the
only to the extent of income from passive activities. An excep-
at-risk rules do not apply to losses from an activity of holding
tion for certain rental real estate activities (explained later) may
real property placed in service before 1987. They also do not
apply.
apply to losses from your interest acquired before 1987 in a
pass-through entity engaged in such activity. The activity of
holding mineral property does not qualify for this exception. Passive Activity
A passive activity is any business activity in which you did not
In most cases, you are not at risk for amounts such as the
materially participate and any rental activity, except as ex-
following.
plained later. If you are a limited partner, in most cases, you are
• Nonrecourse loans used to finance the activity, to acquire
not treated as having materially participated in the partnership's
property used in the activity, or to acquire your interest in the
activities for the year.
activity that are not secured by your own property (other than
property used in the activity). However, there is an exception The rental of real or personal property is a rental activity un-
for certain nonrecourse financing borrowed by you in connec- der the passive activity loss rules in most cases, but exceptions
tion with the activity of holding real property (other than min- apply. If your rental of property is not treated as a rental activi-
eral property). See Qualified nonrecourse financing, later. ty, you must determine whether it is a trade or business activity
• Cash, property, or borrowed amounts used in the activity and, if so, whether you materially participated in the activity
(or contributed to the activity, or used to acquire your interest for the tax year.
in the activity) that are protected against loss by a guarantee, See the Instructions for Form 8582 to determine whether
stop-loss agreement, or other similar arrangement (excluding you materially participated in the activity and for the definition
casualty insurance and insurance against tort liability). of “rental activity.”
• Amounts borrowed for use in the activity from a person See Pub. 925 for special rules that apply to rentals of:
who has an interest in the activity (other than as a creditor) or • Substantially nondepreciable property,
who is related under section 465(b)(3)(C) to a person (other • Property incidental to development activities, and
than you) having such an interest. • Property related to activities in which you materially par-
ticipate.

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Activities That Are Not Passive Activities Exception for Certain Rental Real Estate Activities
Activities of real estate professionals. If you were a real es- If you meet all of the following conditions, your rental real es-
tate professional for 2023, any rental real estate activity in tate losses are not limited by the passive activity loss rules, and
which you materially participated is not a passive activity. You you do not need to complete Form 8582. If you do not meet all
were a real estate professional for the year only if you met both of these conditions, see the Instructions for Form 8582 to find
of the following conditions. out if you must complete and attach Form 8582 to figure any
• More than half of the personal services you performed in losses allowed.
trades or businesses during the year were performed in real 1. Rental real estate activities are your only passive activi-
property trades or businesses in which you materially participa- ties.
ted. 2. You do not have any prior year unallowed losses from
• You performed more than 750 hours of services during any passive activities.
the year in real property trades or businesses in which you ma-
3. All of the following apply if you have an overall net loss
terially participated.
from these activities.
If you are married filing jointly, either you or your spouse
a. You actively participated (defined later) in all of the
must meet both of the above conditions without taking into ac-
rental real estate activities.
count services performed by the other spouse.
b. If married filing separately, you lived apart from your
A real property trade or business is any real property devel-
spouse all year.
opment, redevelopment, construction, reconstruction, acquisi-
tion, conversion, rental, operation, management, leasing, or c. Your overall net loss from these activities is $25,000 or
brokerage trade or business. Services you performed as an em- less ($12,500 or less if married filing separately).
ployee are not treated as performed in a real property trade or d. You have no current or prior year unallowed credits
business unless you owned more than 5% of the stock (or more from passive activities.
than 5% of the capital or profits interest) in the employer. e. Your modified adjusted gross income (defined later) is
If you qualify as a real estate professional, rental real estate $100,000 or less ($50,000 or less if married filing separately).
activities in which you materially participated are not passive f. You do not hold any interest in a rental real estate activi-
activities. For purposes of determining whether you materially ty as a limited partner or as a beneficiary of an estate or a trust.
participated in your rental real estate activities, each interest in
rental real estate is a separate activity unless you elect to treat Active participation. You can meet the active participation
all your interests in rental real estate as one activity. To make requirement without regular, continuous, and substantial in-
this election, attach a statement to your original tax return that volvement in real estate activities. But you must have participa-
declares you are a qualifying taxpayer for the year and you are ted in making management decisions or arranging for others to
making the election under section 469(c)(7)(A). The election provide services (such as repairs) in a significant and bona fide
applies for the year made and all later years in which you are a sense. Such management decisions include:
real estate professional. You can revoke the election only if • Approving new tenants,
your facts and circumstances materially change. • Deciding on rental terms,
If you did not make this election on your timely filed • Approving capital or repair expenditures, and
TIP return, you may be eligible to make a late election to • Other similar decisions.
treat all your interest in rental real estate as one activ- You are not considered to actively participate if, at any time
ity. See Rev. Proc. 2011-34, 2011-24 I.R.B. 875, available at during the tax year, your interest (including your spouse's inter-
IRS.gov/irb/2011-24_IRB#RP-2011-34. est) in the activity was less than 10% by value of all interests in
the activity. Except as provided in regulations, limited partners
If you were a real estate professional for 2023, complete aren't treated as actively participating in a partnership's rental
Schedule E, line 43. real estate activities.
Other activities. The rental of a dwelling unit that you used as Modified adjusted gross income. This is your adjusted gross
a home is not subject to the passive loss limitation rules. See income from Form 1040, 1040-SR, or Form 1040-NR, line 11,
Line 2, later, to see if you used the dwelling unit as a home. without taking into account:
A working interest in an oil or gas well you held directly or • Any allowable passive activity loss,
through an entity that did not limit your liability is not a pas- • Rental real estate losses allowed for real estate professio-
sive activity even if you did not materially participate. nals (see Activities of real estate professionals, earlier),
Royalty income not derived in the ordinary course of a trade • Taxable social security or tier 1 railroad retirement bene-
or business reported on Schedule E in most cases is not consid- fits,
ered income from a passive activity. • Deductible contributions to a traditional IRA or certain
other qualified retirement plans under section 219,
For more details on passive activities, see the Instructions
for Form 8582 and Pub. 925. • The student loan interest deduction,
• The deduction for one-half of self-employment tax,
• The exclusion from income of interest from series EE and
I U.S. savings bonds used to pay higher education expenses,

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• Any excluded amounts under an employer's adoption as- 2023. Accordingly, all lines related to qualified sick and family
sistance program, and leave wages remain on the employment tax returns for 2023.
• The deduction allowed for foreign-derived intangible in-
come and global intangible low-taxed income. Line A
Recordkeeping If you made any payments in 2023 that would require you to
You must keep records to support items reported on Schedule E file any Forms 1099, check the “Yes” box. Otherwise, check
in case the IRS has questions about them. If the IRS examines the “No” box. In general, if you paid at least $600 for services
your tax return, you may be asked to explain the items repor- performed by someone who is not your employee (nonemploy-
ted. Good records will help you explain any item and arrive at ee compensation), you must file Form 1099-NEC; and, you
the correct tax with a minimum of effort. If you do not have re- generally must file Form 1099-MISC if you paid at least $600
cords, you may have to spend time getting statements and re- in rents, prizes, medical and health care payments, or other
ceipts from various sources. If you cannot produce the correct miscellaneous amounts that would be income to the person re-
documents, you may have to pay additional tax and be subject ceiving them. See the 2023 General Instructions for Certain In-
to penalties. formation Returns if you are unsure whether you were required
to file any Forms 1099. Also, see the separate instructions for
each Form 1099.

Specific Instructions Income or Loss From Rental Real
Filers of Form 1041. If you are a fiduciary filing Schedule E Estate and Royalties
with Form 1041, enter the estate's or trust's employer identifi- Use Part I to report the following.
cation number (EIN) in the space for “Your social security • Income and expenses from rental real estate (including
number.” personal property leased with real estate).
• Royalty income and expenses.
• For an estate or trust only, farm rental income and expen-
ses based on crops or livestock produced by the tenant. Estates
Part I
and trusts do not use Form 4835 or Schedule F (Form 1040)
Before you begin, see Line 3 and Line 4, later, to de- for this purpose.
! termine if you should report your rental real estate If you own a part interest in a rental real estate property, re-
CAUTION and royalty income on Schedule C or Form 4835, in-
port only your part of the income and expenses on Schedule E.
stead of Schedule E.
Complete lines 1a, 1b, and 2 for each rental real estate prop-
Qualified paid sick leave and qualified paid family leave erty. For royalty property, enter code “6” on line 1b and leave
payroll tax credit. Generally, the credit for qualified sick and lines 1a and 2 blank for that property.
family leave wages, as enacted under the Families First Coro-
navirus Response Act (FFCRA) and amended and extended by If you have more than three rental real estate or royalty
the COVID-related Tax Relief Act of 2020, for leave taken af- properties, complete and attach as many Schedules E as you
ter March 31, 2020, and before April 1, 2021, and the credit for need to list them. But answer lines A and B and fill in lines 23a
qualified sick and family leave wages under sections 3131, through 26 on only one Schedule E. The figures on lines 23a
3132, and 3133 of the Internal Revenue Code, as enacted under through 26 on that Schedule E should be the combined totals
the American Rescue Plan Act of 2021 (the ARP) for leave for all properties reported on your Schedules E. If you are also
taken after March 31, 2021, and before October 1, 2021, have using page 2 of Schedule E, use the same Schedule E on which
expired. However, employers that pay qualified sick and family you entered the combined totals for Part I.
leave wages in 2023 for leave taken after March 31, 2020, and Personal property. Do not use Schedule E to report income
before October 1, 2021, are eligible to claim a credit for quali- and expenses from the rental of personal property, such as
fied sick and family leave wages in the quarter of 2023 in equipment or vehicles. Instead, use Schedule C if you are in the
which the qualified wages were paid. For more information, business of renting personal property. You are in the business
see Form 941, lines 11b, 11d, 13c, and 13e; and Form 944, of renting personal property if the primary purpose for renting
lines 8b, 8d, 10d, and 10f. You must include the full amount the property is income or profit and you are involved in the
(both the refundable and nonrefundable portions) of the credit rental activity with continuity and regularity.
for qualified sick and family leave wages in gross income on If your rental of personal property is not a business, see the
line 3 or 4, as applicable, for the tax year that includes the last instructions for Schedule 1 (Form 1040), lines 8l and 24b, to
day of any calendar quarter with respect to which a credit is al- find out how to report the income and expenses.
lowed.
Extraterritorial income exclusion. Except as otherwise pro-
Note. A credit is available only if the leave was taken after vided in the Internal Revenue Code, gross income includes all
March 31, 2020, and before October 1, 2021, and only after the income from whatever source derived. Gross income, however,
qualified leave wages were paid, which might, under certain does not include extraterritorial income that is qualifying for-
circumstances, not occur until a quarter after September 30, eign trade income under certain circumstances. Use Form 8873
2021, including qualifying quarterly payments made during to figure the extraterritorial income exclusion. Report it on
Schedule E as explained in the Instructions for Form 8873.

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Chapter 11 bankruptcy cases. If you were a debtor in a chap- • Any days you used the unit as your main home before or
ter 11 bankruptcy case, see Chapter 11 Bankruptcy Cases under after renting it or offering it for rent, if you rented or tried to
Income in the Instructions for Form 1040. rent it for at least 12 consecutive months (or for a period of less
than 12 consecutive months at the end of which you sold or ex-
Income you report on Schedule E may be qualified changed it).
TIP business income and entitle you to a deduction on
Form 1040, 1040-SR, or 1040-NR. See the Instruc- Whether or not you can deduct expenses for the unit de-
tions for Form 8995-A for more information about this deduc- pends on whether or not you used the unit as a home in 2023.
tion. You used the unit as a home if your personal use of the unit
was more than the greater of:
• 14 days, or
Line 1a 10% of the total days it was rented to others at a fair rent-
•
For rental real estate property only, show the street address, al price.
city or town, state, and ZIP code. If the property is located in a
foreign country, enter the city, province or state, country, and If you did not use the unit as a home, you can deduct all
postal code. your expenses for the rental part, subject to the at-risk rules and
the passive activity loss rules explained earlier.
Line 1b
If you did use the unit as a home and rented the unit out for
Enter one of the codes listed under “Type of Property” in Part I fewer than 15 days in 2023, do not report the rental income and
of the form. do not deduct any rental expenses. If you itemize deductions on
Land rental. Enter code “5” for rental of land. For details Schedule A, you can deduct allowable interest, taxes, and casu-
about the tax treatment of income from this type of rental prop- alty losses.
erty, see Rental of Nondepreciable Property in Pub. 925.
If you did use the unit as a home and rented the unit out for
Self-rental. Enter code “7” for self-rental if you rent property 15 or more days in 2023, you may not be able to deduct all
to a trade or business in which you materially participated. See your rental expenses. See Pub. 527 for more information.
Rental of Property to a Nonpassive Activity in Pub. 925 for de-
tails about the tax treatment of income from this type of rental Regardless of whether you used the unit as a home,
property. ! expenses related to days of personal use do not qualify
CAUTION as rental expenses. You must allocate your expenses
Other. Enter code “8” if the property is not one of the other
based on the number of days of personal use to total use of the
types listed on the form. Attach a statement to your return de-
property. For example, you used your property for personal use
scribing the property.
for 7 days and rented it for 63 days. In most cases, 10% (7 ÷
70) of your expenses are not rental expenses and cannot be de-
Line 2 ducted on Schedule E.
If you rented out a dwelling unit that you also used for personal
purposes during the year, you may not be able to deduct all the QJV. Check the box for “QJV” if you owned the property as a
expenses for the rental part. “Dwelling unit” (unit) means a member of a QJV reporting income not subject to self-employ-
house, apartment, condominium, mobile home, boat, or similar ment tax. See Qualified Joint Venture (QJV), earlier.
property.
Line 3
For each property listed on line 1a, report the number of
days in the year each property was rented at fair rental value If you received rental income from real estate (including per-
and the number of days of personal use. sonal property leased with real estate), report the income on
line 3. Use a separate column (A, B, or C) for each rental prop-
A day of personal use is any day, or part of a day, that the erty. Include income received for renting a room or other space.
unit was used by:
• You for personal purposes; Any other income should be included and reported on line 3,
• Any other person for personal purposes, if that person with a statement attached to your return.
owns part of the unit (unless rented to that person under a If you received services or property instead of money as
“shared equity” financing agreement); rent, report the fair market value of the services or property as
• Anyone in your family (or in the family of someone else rental income on line 3.
who owns part of the unit), unless the unit is rented at a fair
rental price to that person as his or her main home; Generally, rental real estate activity is reported on Sched-
• Anyone who pays less than a fair rental price for the unit; ule E even if it is also a trade or business activity; however, if
or you provided significant services to the renter, such as maid
• Anyone under an agreement that lets you use some other service, report the rental activity on Schedule C, not on Sched-
unit. ule E. Significant services do not include the furnishing of heat
and light, cleaning of public areas, trash collection, or similar
Do not count as personal use: services.
• Any day you spent working substantially full time repair-
ing and maintaining the unit, even if family members used it If you were a real estate dealer, include only the rent re-
for recreational purposes on that day; or ceived from real estate (including personal property leased with

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this real estate) you held for the primary purpose of renting to You cannot take both the credit and the deduction for the
produce income. Do not use Schedule E to report income and same expenditures.
expenses from rentals of real estate you held for sale to cus-
tomers in the ordinary course of your business as a real estate Line 6
dealer. Instead, use Schedule C for those rentals. You can deduct ordinary and necessary auto and travel expen-
For more details on rental income, see Pub. 527. ses related to your rental activities, including 50% of meal ex-
penses incurred while traveling away from home.
Rental income from farm production or crop shares. Re-
port farm rental income and expenses on Form 4835 if: In most cases, you can either deduct your actual expenses or
• You are an individual, take the standard mileage rate. You must use actual expenses if
• You received rental income based on crops or livestock you used more than four vehicles simultaneously in your rental
produced by the tenant, and activities (as in fleet operations). You cannot use actual expen-
• You did not materially participate in the management or ses for a leased vehicle if you previously used the standard
operation of the farm. mileage rate for that vehicle.

Line 4 You can use the standard mileage rate for 2023 only if you:
Report on line 4 royalties from oil, gas, or mineral properties • Owned the vehicle and used the standard mileage rate for
(not including operating interests); copyrights; and patents. Use the first year you placed the vehicle in service; or
a separate column (A, B, or C) for each royalty property. • Leased the vehicle and are using the standard mileage
rate for the entire lease period (except the period, if any, before
If you received $10 or more in royalties during 2023, the 1998).
payer should send you a Form 1099-MISC or similar statement
by February 15, 2024, showing the amount you received. Re- If you take the standard mileage rate, multiply the number
port this amount on line 4. of miles driven in connection with your rental activities by 65.5
cents a mile. Include this amount and your parking fees and
If you are in business as a self-employed writer, inventor, ar- tolls on line 6.
tist, etc., report your royalty income and expenses on Sched-
ule C, not on Schedule E. You cannot deduct rental or lease payments, deprecia-
tion, or your actual auto expenses if you use the
You may be able to treat amounts received as “royalties” for CAUTION! standard mileage rate.
the transfer of a patent or amounts received on the disposal of
coal and iron ore as the sale of a capital asset. For details, see If you deduct actual auto expenses:
Pub. 544. Include on line 6 the rental activity portion of the cost of
•
Enter on line 4 the gross amount of royalty income, even if gasoline, oil, repairs, insurance, tires, license plates, etc.; and
state or local taxes were withheld from oil or gas payments you • Show auto rental or lease payments on line 19 and depre-
received. Include taxes withheld by the producer on line 16. ciation on line 18.

If you claim any auto expenses (actual or the standard mile-
General Instructions for Lines 5 Through 21 age rate), you must complete Part V of Form 4562 and attach
Enter your rental and royalty expenses for each property in the Form 4562 to your tax return.
appropriate column. You can deduct all ordinary and necessary
expenses, such as taxes, interest, repairs, insurance, manage- See Pub. 527 and Pub. 463 for details.
ment fees, agents' commissions, and depreciation.
Line 10
Do not deduct the value of your own labor or amounts paid
for capital investments or capital improvements. Include on line 10 fees for tax advice and the preparation of tax
forms related to your rental real estate or royalty properties.
Enter your total expenses for mortgage interest (line 12), de-
preciation expenses and depletion (line 18), and total expenses Do not deduct legal fees paid or incurred to defend or pro-
(line 20) on lines 23c through 23e, respectively, even if you tect title to property, to recover property, or to develop or im-
have only one property. prove property. Instead, you must capitalize these fees and add
them to the property's basis.
Renting out part of your home. If you rent out only part of
your home or other property, deduct the part of your expenses
that applies to the rented part. Lines 12 and 13
Credit or deduction for access expenditures. You may be In most cases, to determine the interest expense allocable to
able to claim a tax credit for eligible expenditures paid or in- your rental activities, you must have records to show how the
curred in 2023 to provide access to your business for individu- proceeds of each debt were used. Specific tracing rules apply
als with disabilities. See Form 8826 for details. for allocating debt proceeds and repayment. In general, you al-
locate interest on a loan the same way you allocate the loan
You can also elect to deduct up to $15,000 of qualified costs proceeds. You allocate loan proceeds by tracing disbursements
paid or incurred in 2023 to remove architectural or transporta- to specific uses.
tion barriers to individuals with disabilities and the elderly.

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The easiest way to trace disbursements to specific ples of improvements are adding substantial insulation or re-
TIP uses is to keep the proceeds of a particular loan sepa- placing an entire HVAC system. Amounts paid to improve your
rate from any other funds. property must generally be capitalized and depreciated (that is,
they cannot be deducted in full in the year they are paid or in-
Limitation on business interest. Interest you paid as part of curred). See Line 18, later.
your rental real estate activity is not subject to the limitation on
business interest unless your rental real estate activity is a trade
Line 16
or business. If your rental real estate activity is a trade or busi-
ness, you must file Form 8990 to deduct any interest expenses Do not reduce your deduction for social security and
of that rental real estate activity unless you meet one of the fil- ! Medicare taxes by the nonrefundable and refundable
ing exceptions in the Instructions for Form 8990. CAUTION portions of the FFCRA and ARP credits for qualified
If the interest you paid in your rental real estate trade or sick and family leave wages claimed on an employment tax re-
business is limited, figure the limit on your business interest turn. Instead, report the credits as income on line 3 or 4, as ap-
expenses on Form 8990 before completing lines 12 and 13. plicable.
Follow the instructions under How to report, later, but report
the reduced interest on lines 12 and 13. The interest you can't Line 17
deduct this year will carry forward to next year on Form 8990.
You can deduct the cost of ordinary and necessary telephone
If your real estate activity is not a trade or business or you calls related to your rental activities or royalty income (for ex-
meet one of the filing exceptions for Form 8990, follow the in- ample, calls to the renter). However, the base rate (including
structions under How to report, later, and report all of your de- taxes and other charges) for local telephone service for the first
ductible interest on lines 12 and 13. telephone line into your residence is a personal expense and is
How to report. If you have a mortgage on your rental proper- not deductible.
ty, enter on line 12 the amount of interest you paid for 2023 to
banks or other financial institutions. Line 18
Do not deduct prepaid interest when you paid it. You can Depreciation is the annual deduction you must take to recover
deduct it only in the year to which it is properly allocable. the cost or other basis of business or investment property hav-
Points, including loan origination fees, charged only for the use ing a useful life substantially beyond the tax year. Land is not
of money must be deducted over the life of the loan. depreciable.
If you paid $600 or more in interest on a mortgage during
Depreciation starts when the property is available and ready
2023, the recipient should send you a Form 1098 or similar
for use in your business or for the production of income. It
statement by January 31, 2024, showing the total interest re-
ends when you deduct all your depreciable cost or other basis
ceived from you.
or no longer use the property in your business or for the pro-
If you paid more mortgage interest than is shown on your duction of income.
Form 1098 or similar statement, see Pub. 334 regarding deduc-
tion limits to find out if you can deduct part or all of the addi- See the Instructions for Form 4562 to figure the amount of
tional interest. If you can, enter the entire deductible amount on depreciation to enter on line 18.
line 12. Attach a statement to your return explaining the differ-
You must complete and attach Form 4562 only if you are
ence. In the space to the left of line 12, enter “See attached.”
claiming:
Note. If the recipient was not a financial institution or you did • Depreciation on property first placed in service during
not receive a Form 1098 from the recipient, report your deduc- 2023;
tible mortgage interest on line 13. • Depreciation on listed property (defined in the Instruc-
tions for Form 4562), including a vehicle, regardless of the date
If you and at least one other person (other than your spouse it was placed in service; or
if you file a joint return) were liable for and paid interest on the A section 179 expense deduction or amortization of costs
•
mortgage, and the other person received Form 1098, report that began in 2023.
your share of the deductible interest on line 13. Attach a state-
ment to your return showing the name and address of the per- See Pub. 527 for more information on depreciation of resi-
son who received Form 1098. On the dotted line next to dential rental property. See Pub. 946 for a more comprehensive
line 13, enter “See attached.” guide to depreciation.
If you have an economic interest in mineral property, you
Line 14 may be able to take a deduction for depletion. Mineral property
You can deduct the amounts paid for repairs and maintenance. includes oil and gas wells, mines, and other natural deposits
However, you cannot deduct the cost of improvements. Repairs (including geothermal deposits). See section 614 and the rela-
and maintenance costs are those costs that keep the property in ted regulations for rules on how to treat separate mineral inter-
an ordinarily efficient operating condition. Examples are fixing ests.
a broken lock or painting a room. Separating cost of land and buildings. If you buy buildings
In contrast, improvements are amounts paid to better or re- and your cost includes the cost of the land on which they stand,
store your property or adapt it to a new or different use. Exam- you must divide the cost between the land and the buildings to

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figure the basis for depreciation of the buildings. The part of from these entities for the alternative minimum tax on Form
the cost that you allocate to each asset is the ratio of the fair 6251 or Schedule I (Form 1041).
market value of that asset to the fair market value of the whole
property at the time you buy it.
If you are not certain of the fair market values of the land Part II
and the buildings, you can divide the cost between them based
on their assessed values for real estate tax purposes. Income or Loss From Partnerships and S
Corporations
Line 19
If you are a member of a partnership or joint venture or a
Enter on line 19 any ordinary and necessary expenses not listed shareholder in an S corporation, use Part II to report your share
on lines 5 through 18. of the partnership or S corporation income (even if not re-
You may be able to deduct, on line 19, part or all of the cost ceived) or loss.
of energy efficient commercial building property and energy If you elected to be taxed as a QJV instead of a part-
efficient building retrofit property placed in service during the ! nership, follow the reporting rules under QJV, earlier.
tax year. For details, see section 179D, Form 7205 and its sepa- CAUTION
rate instructions, and Rev. Proc. 2022-14, 2022-7 I.R.B. 580,
available at Rev. Proc. 2022-14. You should receive a Schedule K-1 from the partnership or
S corporation. You should also receive a copy of the Partner's
or Shareholder's Instructions for Schedule K-1. Your copy of
Line 21
Schedule K-1 and its instructions will tell you where on your
If you have amounts for which you are not at risk, use Form return to report your share of the items. If you did not receive
6198 to determine the amount of your deductible loss. Enter these instructions with your Schedule K-1, see your tax return
that amount in the appropriate column of Schedule E, line 21. instructions for how to get tax forms, instructions, and publica-
In the space to the left of line 21, enter “Form 6198.” Attach tions. Do not attach Schedules K-1 to your return. Keep them
Form 6198 to your return. For details on the at-risk rules, see for your records.
At-Risk Rules, earlier.
If you are treating items on your tax return differently from
Line 22 the way the partnership or S corporation reported them on its
return, you may have to file Form 8082.
Do not complete line 22 if the amount on line 21 is from royal-
ty properties.
Special Rules That Limit Losses
If you have a rental real estate loss from a passive activity If you report a loss from a partnership or S corporation, your
(defined earlier), the amount of loss you can deduct may be loss may be reduced or not allowed this year. Apply the basis
limited by the passive activity loss rules. You may need to rules, at-risk rules, and passive activity loss rules to your loss
complete Form 8582 to figure the amount of loss, if any, to en- on Schedule E.
ter on line 22. See the Instructions for Form 8582 to determine
If your loss is also subject to the excess business loss rules,
if your loss is limited.
you figure that limitation separately on Form 461. Any reduc-
If your rental real estate loss is not from a passive activity or tion to your loss due to the excess business loss rules will not
you meet the exception for certain rental real estate activities be reflected on your Schedule E. See the Instructions for Form
(explained earlier), you do not have to complete Form 8582. 461 for more information.
Enter the (loss) from line 21 on line 22. Basis rules for partnerships. Generally, you may not claim
If you have an unallowed rental real estate loss from a prior your share of a partnership loss (including a capital loss) to the
year that after completing Form 8582 you can include this year, extent that it is greater than the adjusted basis of your partner-
include that loss on line 22. ship interest at the end of the partnership's tax year. Any losses
and deductions not allowed this year because of the basis limit
can be carried forward indefinitely and deducted in a later year
subject to the basis limit for that year. To figure the basis of
Parts II and III your interest in a partnership, you can use the Worksheet for
Adjusting the Basis of a Partner's Interest in the Partnership in
If you need more space in Part II or III to list your income or
the Partner's Instructions for Schedule K-1 (Form 1065). For
losses, attach a continuation sheet using the same format as
more details on the basis rules for partnerships, see Pub. 541.
shown in Part II or III. However, be sure to complete the “To-
tals” columns for lines 29a and 29b, or lines 34a and 34b, as If you had a loss from a partnership that was not allowed
appropriate. If you also completed Part I on more than one last year because of the basis rules, but all or part is allowed
Schedule E, use the same Schedule E on which you entered the this year, see Line 27, later, for how to report it.
combined totals in Part I. After applying the basis rules, the loss you report on Sched-
Tax preference items. If you are a partner, a shareholder in an ule E may be further reduced by the at-risk rules and passive
S corporation, or a beneficiary of an estate or trust, you must activity loss rules.
take into account your share of preferences and adjustments

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Basis rules for S corporations. Generally, the deduction for If you had a loss from the partnership or S corporation that
your share of aggregate losses and deductions reported on was not allowed last year because of the passive activity loss
Schedule K-1 (Form 1120-S) is limited to the basis of your rules, but all or part is allowed this year, see Line 27, later, for
stock (determined with regard to distributions received during how to report it.
the tax year) and loans from you to the corporation. The basis Excess business loss rules. If you report a loss on Schedule E
of your stock is generally figured at the end of the corporation's from a partnership or S corporation engaged in a trade or busi-
tax year. Any losses and deductions not allowed this year be- ness, use Form 461 to figure your excess business loss. Your
cause of the basis limit can be carried forward indefinitely and excess business loss will not be reflected on your Schedule E;
deducted in a later year subject to the basis limit for that year. instead, it will be added to your income on Form 1040 and car-
To figure your aggregated stock basis, you can generally use ried forward to a subsequent year as a net operating loss. For
Form 7203. For more details on the basis rules for S corpora- more information, see the Instructions for Form 461.
tions, see the Instructions for Form 7203.
If you are claiming a deduction for your share of an aggre- Domestic Partnerships
gate loss (or you receive a distribution, dispose of stock, or re- See the Schedule K-1 instructions before entering on your re-
ceive a loan repayment from an S corporation), check the box turn other partnership items from a passive activity or income
on the appropriate line in Part III, column (e), and attach Form or loss from any publicly traded partnership.
7203 to your return.
You can deduct unreimbursed ordinary and necessary ex-
If you had a loss from an S corporation that was not allowed penses you paid on behalf of the partnership if you were re-
last year because of the basis rules, but all or part is allowed quired to pay these expenses under the partnership agreement.
this year, see Line 27, later, for how to report it. See Line 27, later, for how to report these expenses.
After applying the basis rules, the loss you report on Sched- If you used loan proceeds to buy an interest in, or make a
ule E may be further reduced by the at-risk rules and passive contribution to the capital of, a partnership (debt-financed ac-
activity loss rules. quisition), report your share of deductible partnership interest
At-risk rules. If you have (a) a loss or other deduction from expense on either Schedule A or Schedule E, depending on the
any activity carried on as a trade or business or for the produc- type of asset (or expenditure if the allocation is based on the
tion of income by the partnership or S corporation, and (b) tracing of loan proceeds) to which the interest expense is allo-
amounts in the activity for which you are not at risk, your loss cated. See Line 28, later, for more information about reporting
may be limited. For more information, see At-Risk Rules, earli- these interest expenses.
er. If you claimed a credit for federal tax on gasoline or other
If you are subject to the at-risk rules for any activity, check fuels on your 2022 Form 1040, 1040-SR, or 1040-NR based on
the box on the appropriate line in Part II, column (f), of Sched- information received from the partnership, enter as income in
ule E, and use Form 6198 to figure the amount of any deducti- column (h) or column (k), whichever applies, the amount of the
ble loss. If the activity is nonpassive, enter any deductible loss credit claimed for 2022.
from Form 6198 on the appropriate line in Part II, column (i), Part or all of your share of partnership income or loss from
of Schedule E. the operation of the business may be considered net earnings
If you had a loss from the partnership or S corporation that from self-employment that must be reported on Schedule SE.
was not allowed last year because of the at-risk rules, but all or Enter the amount from Schedule K-1 (Form 1065), box 14,
part is allowed this year, see Line 27, later, for how to report it. code A, on Schedule SE after you reduce this amount by any
After applying the at-risk rules, the loss you report on allowable expenses attributable to that income.
Schedule E may be further reduced by the passive activity loss
rules. Foreign Partnerships
Passive activity loss rules. For more information about pas- Follow the instructions below in addition to the instructions
sive activity losses, see Passive Activity Loss Rules, earlier. earlier under Domestic Partnerships.
If you have a passive activity loss, in most cases you need to If you are a U.S. person, you may have received Forms
complete Form 8582 to figure the amount of the loss to enter in 1099-B, 1099-DIV, and 1099-INT reporting your share of cer-
Part II, column (g), for that activity. But if you are a general tain partnership income, because payors of income to the for-
partner or an S corporation shareholder reporting your share of eign partnership in most cases are required to allocate and re-
a partnership or an S corporation loss from a rental real estate port payments of that income directly to each of the partners of
activity and you meet all of the conditions listed earlier under the foreign partnership. If you received both Schedule K-1 and
Exception for Certain Rental Real Estate Activities, you do not Form 1099 for the same type and source of partnership income,
have to complete Form 8582. Instead, enter your (loss) in Part report only the income shown on Schedule K-1 in accordance
II, column (g). with its instructions.
If you have passive activity income, complete Part II, col- If you are not a U.S. person, you may have received Forms
umn (h), for that activity. If you have nonpassive income or 1042-S reporting your share of certain partnership income, be-
losses, complete Part II, columns (i) through (k), as appropri- cause payors of income to the foreign partnership in most cases
ate. are required to allocate and report payments of that income di-
rectly to each of the partners of the foreign partnership. If you

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received both Schedule K-1 and Form 1042-S for the same
type and source of partnership income, report the income on Line 27
your return as follows. If you answered “Yes” on line 27, follow the instructions be-
• For all income effectively connected with the conduct of low. If you do not follow these instructions, the IRS may send
a trade or business in the United States, report only the income you a notice of additional tax due because the amounts reported
shown on Schedule K-1 in accordance with its instructions. by the partnership or S corporation on Schedule K-1 do not
• For all income not effectively connected with the conduct match the amounts you reported on your tax return.
of a trade or business in the United States, report on Sched-
ule NEC (Form 1040-NR) only the income shown on Form Losses Not Allowed in Prior Years Due to the Basis
1042-S (if you are required to file Form 1040-NR). or At-Risk Rules
Requirement to file Form 8865. If you are a U.S. person, you Enter your total prior year unallowed losses that are now
•
may have to file Form 8865 if any of the following applies. deductible on a separate line in column (i) of line 28 . Do not
1. You controlled a foreign partnership (that is, you owned combine these losses with, or net them against, any current
more than a 50% direct or indirect interest in the partnership). year amounts from the partnership or S corporation.
2. You owned at least a 10% direct or indirect interest in a • Enter “PYA” in column (a) of the same line.
foreign partnership while U.S. persons controlled that partner-
ship. Prior Year Unallowed Losses From a Passive Activity
3. You had an acquisition, disposition, or change in propor- Not Reported on Form 8582
tional interest of a foreign partnership that: • Enter on a separate line in column (g) of line 28 your to-
a. Increased your direct interest to at least 10% or reduced tal prior year unallowed losses not reported on Form 8582.
your direct interest of at least 10% to less than 10%, or Such losses include prior year unallowed losses now deductible
because you did not have an overall loss from all passive activ-
b. Changed your direct interest by at least a 10% interest.
ities or you disposed of your entire interest in a passive activity
4. You contributed property to a foreign partnership in ex- in a fully taxable transaction. Do not combine these losses
change for a partnership interest if: with, or net them against, any current year amounts from the
a. Immediately after the contribution, you owned, directly partnership or S corporation.
or indirectly, at least a 10% interest in the partnership; or • Enter “PYA” in column (a) of the same line.
b. The value of the property you contributed, when added
to the value of any other property you or any related person Unreimbursed Partnership Expenses
contributed to the partnership during the 12-month period end- You can deduct unreimbursed ordinary and necessary partner-
ing on the date of transfer, exceeds $100,000. ship expenses you paid on behalf of the partnership on Sched-
Also, you may have to file Form 8865 if you contributed ule E if you were required to pay these expenses under the part-
property with built-in gain to a foreign partnership (or certain nership agreement. You can only deduct unreimbursed expen-
domestic partnerships) or to report certain dispositions by a ses on Schedule E that are trade or business expenses under
foreign partnership of property you previously contributed to section 162. Don't report unreimbursed partnership expenses
that partnership if you were a partner at the time of the disposi- separately if the expenses are from a passive activity and you
tion. are required to file Form 8582; otherwise, do the following.
For more details, including penalties for failing to file Form • Enter unreimbursed partnership expenses from nonpas-
sive activities on a separate line in column (i) of line 28. Do not
8865, see Form 8865 and its separate instructions.
combine these expenses with, or net them against, any other
amounts from the partnership.
S Corporations If the expenses are from a passive activity and you are not
•
Distributions of prior year accumulated earnings and profits of required to file Form 8582, enter the expenses related to a pas-
S corporations are dividends and are reported on Form 1040 or sive activity on a separate line in column (g) of line 28. Do not
1040-SR, line 3b. combine these expenses with, or net them against, any other
If you used loan proceeds to buy an interest in, or make a amounts from the partnership.
contribution to the capital of, an S corporation (debt-financed • Enter “UPE” in column (a) of the same line.
acquisition), report your share of deductible S corporation in-
terest expense on either Schedule A or Schedule E, depending Line 28
on the type of asset (or expenditure if the allocation is based on For nonpassive income or loss and passive income or losses for
the tracing of loan proceeds) to which the interest expense is which you are not filing Form 8582, enter in the applicable col-
allocated. See Line 28, later, for more information about report- umn of line 28 your current year ordinary income or loss (after
ing these interest expenses. applying any special rules that limit losses) from the partner-
Your share of the net income of an S corporation is not sub- ship or S corporation. Report each related item required to be
ject to self-employment tax. reported on Schedule E (including items of income or loss sta-
ted separately on Schedule K-1) in the applicable column of a
separate line following the line on which you reported the cur-
rent year ordinary income or loss. Also, enter a description of

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the related item (for example, depletion) in column (a) of the line 37. Do not include this amount in the total on line 37. In-
same line. stead, enter the amount on Form 1040, 1040-SR, or 1040-NR,
line 26.
If you are required to file Form 8582, see the Instructions
for Form 8582 before completing Schedule E. A U.S. person who transferred property to a foreign trust
Debt-financed acquisition. A debt-financed acquisition is the may have to report the income received by the trust as a result
use of loan proceeds to buy an interest in, or to make a contri- of the transferred property if, during 2023, the trust had a U.S.
bution to the capital of, a partnership or S corporation. You beneficiary. See section 679. An individual who received a dis-
must allocate the loan proceeds and the related interest expense tribution from, or who was the grantor of, or transferor to, a
among all the assets of the entity. You can use any reasonable foreign trust must also complete Part III of Schedule B (Form
method. 1040) and may have to file Form 3520. In addition, the owner
of a foreign trust must ensure that the trust files an annual in-
For interest allocated to trade or business assets (or expendi- formation return on Form 3520-A.
tures), report the interest on a separate line of your Schedule E,
Part II. Enter "business interest" and the name of the partner-
ship or S corporation in column (a) and the amount in column
(i). Part IV
For interest allocated to passive activity use, enter the inter-
Income or Loss From Real Estate Mortgage
est on Form 8582 as a deduction from the passive activity of
the partnership or S corporation. Show any deductible amount Investment Conduits (REMICs)
on a separate line on your Schedule E, Part II. Enter "passive If you are the holder of a residual interest in a REMIC, use Part
interest" and the name of the entity in column (a) and the IV to report your total share of the REMIC's taxable income or
amount in column (g). loss for each quarter included in your tax year. You should re-
For interest allocated to investment use, enter the interest on ceive Schedule Q (Form 1066) and instructions from the RE-
Form 4952. Carry any deductible amount allocated to royalties MIC for each quarter. Do not attach Schedule(s) Q to your re-
to a separate line of your Schedule E, Part II. Enter "investment turn. Keep it for your records.
interest" and the name of the entity in column (a) and the If you are treating REMIC items on your tax return differ-
amount in column (i). Carry the balance of the deductible ently from the way the REMIC reported them on its return, you
amount to Schedule A, line 9. may have to file Form 8082.
Any interest allocated to proceeds used for personal purpo-
ses is generally not deductible. If you are the holder of a residual interest in more than one
REMIC, attach a continuation sheet using the same format as
For more information on allocating and reporting these in- in Part IV. Enter the combined totals of columns (d) and (e) on
terest expenses, see Notice 88-37 in Cumulative Bulletin Schedule E, line 39. If you also completed Part I on more than
1988-1. Also, see Notice 89-35 in Cumulative Bulletin 1989-1. one Schedule E, use the same Schedule E on which you entered
Owners of S corporation stock and debt. If you report a the combined totals in Part I.
loss, receive a distribution, dispose of stock, or receive a loan
repayment from an S corporation, you must check the box in REMIC income or loss is not income or loss from a passive
column (e) on line 28 and attach the required basis computa- activity.

tion. For more information, see Basis rules for S corporations, Note. If you are the holder of a regular interest in a REMIC,
earlier. do not use Schedule E to report the income you received. In-
stead, report it on Form 1040 or 1040-SR, line 2b.
Column (c). Report the total of the amounts shown on Sched-
Part III ule(s) Q, line 2c. This is the smallest amount you are allowed
to report as your taxable income (Form 1040, 1040-SR, or
Income or Loss From Estates and Trusts 1040-NR, line 15). It is also the smallest amount you are al-
If you are a beneficiary of an estate or trust, use Part III to re- lowed to report as your alternative minimum taxable income
port your part of the income (even if not received) or loss. You (AMTI) on Form 6251, line 4.
should receive a Schedule K-1 (Form 1041) from the fiduciary. If the amount in column (c) is larger than your taxable in-
Your copy of Schedule K-1 and its instructions will tell you come would otherwise be, enter the amount from column (c)
where on your return to report the items from Schedule K-1. on Form 1040, 1040-SR, or 1040-NR, line 15. Similarly, if the
Do not attach Schedule K-1 to your return. Keep it for your re- amount in column (c) is larger than your AMTI would other-
cords. wise be, enter the amount from column (c) on Form 6251,
If you are treating items on your tax return differently from line 4. Enter “Sch Q” on the dotted line to the left of this
the way the estate or trust reported them on its return, you may amount on Form 1040, 1040-SR, or 1040-NR, line 15; and
have to file Form 8082. Form 6251, line 4, if applicable.

If you have estimated taxes credited to you from a trust Note. These rules also apply to estates and trusts that hold a
(Schedule K-1 (Form 1041), box 13, code A), enter “ES pay- residual interest in a REMIC. Be sure to make the appropriate
ment claimed” and the amount on the dotted line next to entries on the comparable lines on Form 1041.

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Do not include the amount shown in column (c) in the less the form displays a valid OMB control number. Books or
! total on Schedule E, line 39. records relating to a form or its instructions must be retained as
CAUTION long as their contents may become material in the administra-
Column (e). Report the amount(s) shown on Schedule(s) Q, tion of any Internal Revenue law. Generally, tax returns and re-
line 3b. turn information are confidential, as required by section 6103.
The time needed to complete and file this form will vary de-
pending on individual circumstances. The estimated burden for
individual taxpayers filing this form is included in the esti-
Part V Summary mates shown in the instructions for their individual income tax
Line 42 return. The estimated burden for all other taxpayers who file
this form is approved under OMB control number 1545-1972
Special estimated tax rules may apply if you have gross farm- and is shown next.
ing or fishing income. You will not be charged a penalty for
underpayment of estimated tax if: . . . . . . . . . . . . . . . . . . . . . 3 hr., 39 min.
Recordkeeping
1. Your gross farming or fishing income for 2022 or 2023 Learning about the law or the form. . . . . . . . . 2 hr., 16 min.
is at least two-thirds of your gross income; and Preparing the form . . . . . . . . . . . . . . . . . . 3 hr., 25 min.
2. You file your 2023 tax return and pay the tax due by Copying, assembling, and sending the form to
March 1, 2024. the IRS. . . . . . . . . . . . . . . . . . . . . . . . . . 34 min.

For details, see chapter 15 of Pub. 225.
Paperwork Reduction Act Notice. We ask for the informa- If you have comments concerning the accuracy of these time
tion on this form to carry out the Internal Revenue laws of the estimates or suggestions for making this form simpler, we
United States. You are required to give us the information. We would be happy to hear from you. See the instructions for the
need it to ensure that you are complying with these laws and to tax return with which this form is filed.
allow us to figure and collect the right amount of tax.
You are not required to provide the information requested
on a form that is subject to the Paperwork Reduction Act un-

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