IRS Form 8582 (Passive Activity Loss) - Sale of Passive Activities with Suspended Losses

Описание: IRS Form 8582 is completed by noncorporate taxpayers to report their passive activity income and losses. Passive activity losses can generally only be offset against other passive activity income.

If a taxpayer has prior-year unallowed losses related to a passive activity, those losses will be allowed when the taxpayer makes a complete disposition of that passive activity. The prior-year passive activity losses are reclassified to nonpassive losses allowed and can offset other nonpassive income.

In this example, we have a taxpayer with three Schedule K-1s. Two Schedule K-1s are from passive activities, and the third Schedule K-1 is from a business where the taxpayer materially participates in the operations. One of the passive activity Schedule K-1s is marked final because the taxpayer redeemed out of the investment during 2023. Because the redemption qualifies as a complete disposition, the prior year's unallowed losses related to that investment are released.

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