This article will assist you with generating Form 8582, Passive Activity Loss Limitations, for an individual return in Intuit ProConnect.
When filing an individual return for your client, you may wish to generate Form 8582 to figure the amount of any passive activity loss (PAL) for the current or previous year.
Exceptions to filing Form 8582
Per the Form 8582 instructions, Form 8582 is not required if you meet the following exceptions:
- You don't have an overall loss when you combine all your net income and net losses (including prior-year unallowed losses) from business or rental passive activities.
- You actively participated in rental real estate activities and you meet all of the following conditions:
- Rental real estate activities with active participation were your only passive activities.
- You have no prior-year unallowed passive losses from these activities.
- Your total loss from the rental real estate activities wasn't more than $25,000 (or $12,500 if Married Filing Separately).
- If you're Married Filing Separately, you lived apart from your spouse all year.
- You have no current or prior-year unallowed credits from a passive activity.
- Your adjusted gross income was no more than $100,000 (or more than $50,000 if Married Filing Separately).
- You don't hold any interest in a rental real estate activity as a limited partner or as a beneficiary of an estate or trust.
If all of the conditions are met, your rental real estate losses are not limited, and you do not need to complete Form 8582.
- Enter losses reported on Schedule E (Form 1040), Supplemental Income and Loss, Part I, line 22, on Schedule E (Form 1040), Part I, Line 23.
- For losses from a partnership or S corporation, enter the amount of the allowable loss from Schedule K-1, in Schedule E (Form 1040), Part II, column (f).
- Enter losses reported on Line 32 of Form 4835, Farm Rental Income and Expenses, on Form 4835, Line 34c.
How to force Form 8582 to generate on a return:
- Go to the Input Return tab.
- Select Income.
- Select the first SS Benefits, Alimony, Misc. Income (SS Bene., Misc. Inc.) screen.
- Locate the Passive Activity Overrides (8582) section.
- Enter 2 in Form 8582: 1=when applicable, 2=force [Override].
How to automatically generate Form 8582:
Form 8582, Passive Activity Loss Limitations, will only generate automatically if your client has losses (including prior-year unallowed losses) from passive activities. Losses in the following Income screens can trigger the form:
- Business Income (Sch C)
- Rental and Royalty Income (Sch E)
- Farm Income (Sch F/4835)
- Partnership Info (1065 K-1)
- S-Corp Info (1120S K-1)
- Estate or Trust Info (1041 K-1)