US Internal Revenue Service: i8582cr--2000

8/14/2019 US Internal Revenue Service: i8582cr--2000

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2000 Department of the TreasuryInternal Revenue ServiceInstructions for Form8582-CRPassive Activity Credit LimitationsSection references are to the Internal Revenue Code unless otherwise noted.

General Instructions

Purpose of FormForm 8582-CR is used bynoncorporate taxpayers to figure theamount of any passive activity credit(PAC) for the current tax year(including any prior year unallowedcredits) and the amount of creditallowed for the current year. It also is

used to make the election to increasethe basis of credit property when ataxpayer disposes of his or herinterest in an activity.

PACs that are not allowed in thecurrent year are carried forward untilthey are allowed against the tax oneither net passive income or thespecial allowance, if applicable.

Different rules apply to youractivities and the related credit,depending on the type of activity.Generally, passive activities include:q Trade or business activities inwhich you did not materiallyparticipate for the tax year.q Rental activities, regardless of yourparticipation.

See Trade or Business Activitieson page 3 and Rental Activities onpage 2.

For more information, see Pub.925, Passive Activity and At-RiskRules.Note: Corporations subject to thepassive activity rules must useForm8810, Corporate Passive Activity Lossand Credit Limitations.

Who Must FileForm 8582-CR is filed by individuals,estates, and trusts with any of thefollowing credits from passiveactivities.q Investment credit (including therehabilitation credit, energy credit,and reforestation credit),q Work opportunity credit,q Credit for alcohol used as fuel,

q Credit for increasing researchactivities,q Low-income housing credit,q Enhanced oil recovery credit,q Disabled access credit,q Renewable electricity productioncredit,q Empowerment zone employmentcredit,q Indian employment credit,q Credit for employer social securityand Medicare taxes paid on certainemployee tips,q Orphan drug credit,q Credit for contributions to selectedcommunity developmentcorporations,q Nonconventional source fuel credit,q Qualified electric vehicle credit, andq General credits from electing largepartnerships.

Overview of FormThe form contains six parts. The

Specific Instructions, starting onpage 9, include, at the beginning ofthe instructions for each part, a briefexplanation of the purpose or use ofthat part. These explanations give ageneral overview of how the formworks.

Also, reading the instructions thatfollow, see Example of How ToComplete Form 8582-CR, beginningon page 5. The example goesthrough a four-step analysis of howthe form and worksheets arecompleted for a partner in a limitedpartnership that has a low-income

housing credit. This example mayprovide enough information tocomplete the form and worksheetswithout reading all of the instructions.

Activities That Are NotPassive ActivitiesThe following are not passiveactivities.

1. Trade or business activities inwhich you materially participated forthe tax year.

2. Any rental real estate activity inwhich you materially participated ifyou were a real estate professionalfor the tax year. You were a realestate professional only if:

a. More than half of the personalservices you performed in trades orbusinesses were performed in realproperty trades or businesses inwhich you materially participated and

b. You performed more than 750

hours of services in real propertytrades or businesses in which youmaterially participated.

For purposes of this rule, eachinterest in rental real estate is aseparate activity, unless you elect totreat all interests in rental real estateas one activity.

If you are married filing jointly, onespouse must separately meet both ofthe above conditions, without takinginto account services performed bythe other spouse.

A real property trade or business isany real property development,redevelopment, construction,reconstruction, acquisition,conversion, rental, operation,management, leasing, or brokeragetrade or business. Services youperformed as an employee are nottreated as performed in a realproperty trade or business unless youowned more than 5% of the stock (ormore than 5% of the capital or profitsinterest) in the employer.

3. A working interest in an oil orgas well. Your working interest mustbe held directly or through an entity

that does not limit your liability (suchas a general partner interest in apartnership). In this case, it does notmatter whether you materiallyparticipated in the activity for the taxyear.

If, however, your liability was limitedfor part of the year (for example, youconverted your general partnerinterest to a limited partner interestduring the year), some of your incomeand losses from the working interestmay be treated as passive activity

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gross income and passive activitydeductions. See TemporaryRegulations section1.469-1T(e)(4)(ii).

4. The rental of a dwelling unityou used as a residence if section280A(c)(5) applies. This sectionapplies if you rented out a dwellingunit that you also used as a homeduring the year for a number of daysthat exceeds the greater of 14 days

or 10% of the number of days duringthe year that the home was rented ata fair rental.

5. An activity of trading personalproperty for the account of owners ofinterests in the activity. For purposesof this rule, personal property meansproperty that is actively traded, suchas stocks, bonds, and othersecurities. See TemporaryRegulations section 1.469-1T(e)(6).

Generally, credits from theseactivities are not entered on Form8582-CR. However, credits from

these activities may be subject tolimitations other than the passivecredit limitation rules.

Rental ActivitiesA rental activity is a passive activityeven if you materially participated inthe activity (unless it is a rental realestate activity in which you materiallyparticipated and you were a realestate professional).

However, if you meet any of the fiveexceptions listed below, the rental ofthe property is not treated as a rental

activity. See Reporting CreditsFrom the Activities on this page ifyou meet any of the exceptions.

An activity is a rental activity iftangible property (real or personal) isused by customers or held for use bycustomers and the gross income (orexpected gross income) from theactivity represents amounts paid (orto be paid) mainly for the use of theproperty. It does not matter whetherthe use is under a lease, a servicecontract, or some other arrangement.

Exceptions

An activity is not a rental activity if:1. The average period of

customer use is:a. 7 days or less orb. 30 days or less and

significant personal services (seebelow) were provided in making therental property available for customeruse.

Figure the average period ofcustomer use for a class of propertyby dividing the total number of days

in all rental periods by the number ofrentals during the tax year. If theactivity involves renting more thanone class of property, multiply theaverage period of customer use ofeach class by the ratio of the grossrental income from that class to theactivity's total gross rental income.The activity's average period ofcustomer use equals the sum ofthese class-by-class average periods

weighted by gross income. SeeRegulations section 1.469-1(e)(3)(iii).Significant personal services

include only services performed byindividuals. To determine if personalservices are significant, all relevantfacts and circumstances areconsidered. Facts and circumstancesinclude the frequency of the services,the type and amount of labor requiredto perform the services, and the valueof the services relative to the amountcharged for use of the property.

2.Extraordinary personalservices were provided in making therental property available for customeruse.

Extraordinary personal services areservices provided in making rentalproperty available for customer useonly if they are performed byindividuals and the customers' use ofthe rental property is incidental totheir receipt of the services.

3. Rental of the property isincidental to a nonrental activity.

The rental of property is incidentalto an activity of holding property forinvestment if the main purpose of

holding the property is to realize again from its appreciation and thegross rental income is less than 2%of the smaller of the unadjustedbasis or the fair market value (FMV)of the property.

Unadjusted basis is the cost of theproperty without regard todepreciation deductions or any otherbasis adjustment described in section1016.

The rental of property is incidentalto a trade or business activity if:

a. You owned an interest in the

trade or business activity during thetax year;b. The rental property was mainly

used in the trade or business activityduring the tax year or during at least2 of the 5 preceding tax years; and

c. The gross rental income fromthe property is less than 2% of thesmaller of the unadjusted basis or theFMV of the property.

Lodging provided for the employer'sconvenience to an employee or theemployee's spouse or dependents isincidental to the activity or activities inwhich the employee performsservices.

4. You customarily make therental property available duringdefined business hours fornonexclusive use by variouscustomers.

5. You provide property for use ina nonrental activity of a partnership,an S corporation, or joint venture inyour capacity as an owner of aninterest in the partnership, Scorporation, or joint venture.

Reporting Credits From theActivities

If an activity meets any of the fiveexceptions listed above, it is not arental activity. You then mustdetermine:

1. Whether your rental of the

property is a trade or business activity(see Trade or Business Activitieson page 3) and, if so,

2. Whether you materiallyparticipated in the activity for the taxyear (see Material Participation onpage 4).q If the activity is a trade or businessactivity in which you did notmaterially participate, enter thecredits from the activity on Worksheet4 on page 11.q If the activity meets any of the fiveexceptions listed above and is a trade

or business activity in which you didmaterially participate, report thecredits from the activity on the formsyou normally use.

If the rental activity did not meetany of the five exceptions, it isgenerally a passive activity. Specialrules apply if you conduct the rentalactivity through a publicly tradedpartnership (PTP). See PubliclyTraded Partnerships (PTPs) onpage 15.

If the rental activity is not conductedthrough a PTP, the passive rentalactivity is entered in Worksheet 1, 2,

3, or 4 on pages 10 and 11.Worksheet 1 is for credits (other

than rehabilitation credits andlow-income housing credits) frompassive rental real estate activities inwhich you actively participated. SeeActive Participation in a RentalReal Estate Activity on page 3.

Worksheet 2 is for rehabilitationcredits from passive rental real estateactivities and low-income housingcredits for property placed in service

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before 1990. This worksheet is alsoused for low-income housing creditsfrom a partnership, S corporation, orother pass-through entity if yourinterest in the pass-through entity wasacquired before 1990, regardless ofthe date the property was placed inservice.

Worksheet 3 is for low-incomehousing credits for property placed inservice after 1989 (unless held

through a pass-through entity inwhich you acquired your interestbefore 1990).

Worksheet 4 is for credits frompassive trade or business activities inwhich you did not materiallyparticipate and passive rental realestate activities in which you did notactively participate (but notrehabilitation credits from passiverental real estate activities orlow-income housing credits).

Active Participation in a RentalReal Estate Activity

If you actively participated in apassive rental real estate activity, youmay be able to claim credits from theactivity for the tax attributable to aspecial allowance of up to $25,000,reduced by any passive lossesallowed under this exception on Form8582, Passive Activity Losses.

The special allowance also appliesto low-income housing credits andrehabilitation credits from a rental realestate activity, even if you did notactively participate in the activity. Thecredits allowed under the special

allowance are in addition to thecredits allowed for the tax attributableto net passive income.

The special allowance is notavailable if you were married, arefiling a separate return for the year,and lived with your spouse at anytime during the year.

Only an individual, a qualifyingestate, or a qualified revocabletrust that made an election to treatthe trust as part of the decedent'sestate may actively participate in arental real estate activity. Limited

partners may not actively participateunless future regulations provide anexception.

A qualifying estate is the estate ofa decedent for tax years ending lessthan 2 years after the date of thedecedent's death if the decedentwould have satisfied the activeparticipation requirements for therental real estate activity for the taxyear the decedent died.

A qualified revocable trust mayelect to be treated as part of adecedent's estate for purposes of thespecial allowance for activeparticipation in rental real estateactivities. The election must be madeby both the executor (if any) of thedecedent's estate and the trustee ofthe revocable trust. This rule iseffective for estates of decedents whodied after August 5, 1997. For details,

see section 645.You are not considered to actively

participate in a rental real estateactivity if at any time during the taxyear your interest (including yourspouse's interest) in the activity wasless than 10% (by value) of allinterests in the activity. Activeparticipation is a less stringentrequirement than materialparticipation (see MaterialParticipation on page 4).

You may be treated as activelyparticipating if, for example, youparticipated in making managementdecisions or arranging for others toprovide services (such as repairs) ina significant and bona fide sense.Management decisions that maycount as active participation include:q Approving new tenants,q Deciding on rental terms,q Approving capital or repairexpenditures, andq Other similar decisions.

The maximum special allowanceis:q $25,000 for single individuals and

married individuals filing a joint returnfor the tax year.q $12,500 for married individuals whofile separate returns for the tax yearand who lived apart from theirspouses at all times during the taxyear.q $25,000 for a qualifying estatereduced by the special allowance forwhich the surviving spouse qualified.

If your modified adjusted grossincome (defined in the instructions forline 10 on page 10) is $100,000 orless ($50,000 or less if married filingseparately), figure your credits basedon the amount of the maximumspecial allowance referred to in thepreceding paragraph.

If your modified adjusted grossincome is more than $100,000($50,000 if married filing separately),your special allowance is limited to50% of the difference between$150,000 ($75,000 if married filingseparately) and your modifiedadjusted gross income.

If your modified adjusted grossincome is $150,000 or more ($75,000or more if married filing separately),there is no special allowance.

However, for low-income housingcredits for property placed in servicebefore 1990 and for rehabilitationcredits, the limits on modifiedadjusted gross income are increased.If your modified adjusted grossincome is more than $200,000

($100,000 if married filing separately),your special allowance is limited to50% of the difference between$250,000 ($125,000 if married filingseparately) and your modifiedadjusted gross income.

If your modified adjusted grossincome is $250,000 or more($125,000 or more if married filingseparately), there is no specialallowance.

No modified adjusted gross incomelimitation applies when figuring thespecial allowance for low-income

housing credits for property placed inservice after 1989 (other than from apass-through entity in which youacquired your interest before 1990).

Trade or BusinessActivitiesA trade or business activity is anactivity (other than a rental activity oran activity treated as incidental to anactivity of holding property forinvestment) that:

1. Involves the conduct of a tradeor business (within the meaning of

section 162),2. Is conducted in anticipation of

starting a trade or business, or3. Involves research or

experimental expenditures deductibleunder section 174 (or that would beif you chose to deduct rather thancapitalize them).

Reporting Credits From theActivities

Trade or business activities withmaterial participation. If youmaterially participated in a trade or

business activity, the activity is not apassive activity. Report the creditsfrom the activity on the forms younormally use.Trade or business activitieswithout material participation. Ifyou did not materially participate in atrade or business activity, the activityis a passive activity. Generally, youmust use Worksheet 4 on page 11 tofigure the amount to enter on Form8582-CR for each trade or businessactivity in which you did not materially

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participate. However, if you held theactivity through a PTP, special rulesapply. See Publicly TradedPartnerships (PTPs) on page 15.

Material ParticipationFor the material participation testslisted below, participation generallyincludes any work done in connectionwith an activity if you owned aninterest in the activity at the time youdid the work. The capacity in whichyou did the work does not matter.However, work is not participation if:q It is not work that an owner wouldcustomarily do in the same type ofactivity andq One of your main reasons for doingthe work was to avoid thedisallowance of losses or credits fromthe activity under the passive activityrules.Proof of participation. You mayprove your participation in an activityby any reasonable means. You do not

have to maintain contemporaneousdaily time reports, logs, or similardocuments if you can establish yourparticipation by other reasonablemeans. For this purpose, reasonablemeans include, but are not limited to,identifying services performed over aperiod of time and the approximatenumber of hours spent performing theservices during that period, based onappointment books, calendars, ornarrative summaries.Test for investors. Work done asan investor in an activity is not treated

as participation unless you weredirectly involved in the day-to-daymanagement or operations of theactivity. For purposes of this test,work done as an investor includes:

1. Studying and reviewingfinancial statements or reports onoperations of the activity.

2. Preparing or compilingsummaries or analyses of thefinances or operations of the activityfor your own use.

3. Monitoring the finances oroperations of the activity in anonmanagerial capacity.

Test for a spouse. Participation byyour spouse during the tax year in anactivity you own may be counted asyour participation in the activity, evenif your spouse did not own an interestin the activity and whether or not youand your spouse file a joint return forthe tax year.Tests for individuals. Youmaterially participated for the tax yearin an activity if you satisfy at least oneof the following tests.

1. You participated in the activityfor more than 500 hours.

2. Your participation in the activityfor the tax year was substantially allof the participation in the activity ofall individuals (including individualswho did not own any interest in theactivity) for the year.

3. You participated in the activityfor more than 100 hours during thetax year, and you participated at leastas much as any other individual(including individuals who did not ownany interest in the activity) for theyear.

4. The activity is a significantparticipation activity for the taxyear, and you participated in allsignificant participation activitiesduring the year for more than 500hours.

A significant participation activity isany trade or business activity in whichyou participated for more than 100hours during the year and in which

you did not materially participateunder any of the material participationtests (other than this fourth test).

5. You materially participated inthe activity for any 5 (whether or notconsecutive) of the 10 immediatelypreceding tax years.

6. The activity is a personalservice activity in which youmaterially participated for any 3(whether or not consecutive)preceding tax years.

An activity is a personal serviceactivity if it involves the performance

of personal services in the fields ofhealth, law, engineering, architecture,accounting, actuarial science,performing arts, consulting or in anyother trade or business in whichcapital is not a materialincome-producing factor.

7. Based on all the facts andcircumstances, you participated in theactivity on a regular, continuous, andsubstantial basis during the tax year.

You did not materially participate inthe activity under this seventh test,however, if you participated in theactivity for 100 hours or less during

the tax year. Your participation inmanaging the activity does not countin determining whether you materiallyparticipated under this test if:

a. Any person (except you)received compensation for performingservices in the management of theactivity; or

b. Any individual spent morehours during the tax year than youspent performing services in themanagement of the activity

(regardless of whether the individualwas compensated for themanagement services).

Special rules for limited partners.If you were a limited partner in anactivity, you generally did notmaterially participate in the activity.You did materially participate in theactivity, however, if you met materialparticipation test 1, 5, or 6 above forthe tax year.

However, for purposes of thematerial participation tests you arenot treated as a limited partner if youalso were a general partner in thepartnership at all times during thepartnership's tax year ending with orwithin your tax year (or, if shorter,during the portion of the partnership'stax year in which you directly orindirectly owned your limited partnerinterest).

A limited partner's share of anelecting large partnership's taxableincome or loss from all trade or

business and rental activities istreated as income or loss from theconduct of a single passive trade orbusiness activity.Special rules for certain retired ordisabled farmers and survivingspouses of farmers. Certain retiredor disabled farmers and survivingspouses of farmers are treated asmaterially participating in a farmingactivity if the real property used in theactivity meets the estate tax rules forspecial valuation of farm propertypassed from a qualifying decedent.See Temporary Regulations section

1.469-5T(h)(2).Estates and trusts. The PAClimitations apply to an estate or trust.See Temporary Regulations sections1.469-1T(b)(2) and (3). The rules fordetermining material participation forthis purpose have not yet beenissued.

Grouping of ActivitiesGenerally, one or more trade orbusiness activities or rental activitiesmay be treated as a single activity ifthe activities make up an appropriate

economic unit for the measurementof gain or loss under the passiveactivity rules. Whether activities makeup an appropriate economic unitdepends on all the relevant facts andcircumstances. The factors given thegreatest weight in determiningwhether activities make up anappropriate economic unit are:

1. Similarities and differences intypes of trades or businesses,

2. The extent of common control,

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3. The extent of commonownership,

4. Geographical location, and5. Reliance between or among

the activities.Example. You have a significant

ownership interest in a bakery and amovie theater in Baltimore and in abakery and a movie theater inPhiladelphia. Depending on all therelevant facts and circumstances,there may be more than onereasonable method for grouping youractivities. For instance, the followinggroupings may or may not bepermissible.q A single activity,q A movie theater activity and abakery activity,q A Baltimore activity and aPhiladelphia activity, orq Four separate activities.

Once you choose a grouping underthese rules, you must continue usingthat grouping in later tax years unlessa material change in the facts andcircumstances makes it clearlyinappropriate.

The IRS may regroup your activitiesif your grouping fails to reflect one ormore appropriate economic units andone of the primary purposes of yourgrouping is to avoid the passiveactivity limitations.Limitation on grouping certainactivities. The following activitiesmay not be grouped together.

1. A rental activity with a trade orbusiness activity unless the activities

being grouped together make up anappropriate economic unit and

a. The rental activity isinsubstantial relative to the trade orbusiness activity or vice versa or

b. Each owner of the trade orbusiness activity has the sameproportionate ownership interest inthe rental activity. If so, the portionof the rental activity involving therental of property to be used in the

trade or business activity may begrouped with the trade or businessactivity.

2. An activity involving the rentalof real property with an activityinvolving the rental of personalproperty (except personal propertyprovided in connection with the realproperty or vice versa).

3. Any activity with anotheractivity in a different type of businessand in which you hold an interest asa limited partner or as a limitedentrepreneur (as defined in section

464(e)(2)), if that other activityengages in holding, producing, ordistributing motion picture films orvideotapes; farming; leasing section1245 property; or exploring for (orexploiting) oil and gas resources orgeothermal deposits.Activities conducted throughpartnerships, S corporations, andC corporations subject to section469. Once a partnership orcorporation determines its activitiesunder these rules, a partner orshareholder may use these rules togroup those activities with:

q Each other,q Activities conducted directly by thepartner or shareholder, orq Activities conducted through otherpartnerships and corporations.

A partner or shareholder may nottreat as separate activities thoseactivities grouped together by thepartnership or corporation.Partial disposition of an activity.

You may treat the disposition ofsubstantially all of an activity as aseparate activity if you can prove withreasonable certainty:

1. The prior year unallowedlosses, if any, allocable to the part ofthe activity disposed of and

2. The net income or loss for theyear of disposition allocable to thepart of the activity disposed of.

DispositionsUnallowed PACs, unlike unallowedpassive activity losses, are not

allowed when you dispose of yourinterest in an activity. However, youmay elect to increase the basis of thecredit property by the amount of theoriginal basis reduction of theproperty to the extent that the credithas not been allowed under thepassive activity rules. UnallowedPACs that are not used to increasethe basis of the credit property arecarried forward until they are allowed.To make the election, complete PartVI of Form 8582-CR. No basisadjustment may be elected on apartial disposition of your interest in

a passive activity.

Mr. Jones received a Schedule K-1 from the partnership. The low-income housing credit is shown on line 12(a)(3) of Schedule K-1because the property was placed in service after 1989 (post-1989 low-income housing credit).

Example of How To Complete Form 8582-CRIn 2000, John Jones purchased an interest as a limited partner in Partnership A. Mr. Jones is married and files a joint return. During2000, the partnership placed in service a residential rental building that qualified for the low-income housing credit.

Schedule K-1:

Mr. Jones net passive income for 2000 is zero.

Low-income housing credit:12a

12a(1)(1) From section 42(j)(5) partnerships for property placed in

service before 1990

12a(2)(2) Other than on line 12a(1) for property placed in service before 1990Form 8586, line 5

12a(3)(3) From section 42(j)(5) partnerships for property placed in

service after 198912a(4)(4) Other than on line 12a(3) for property placed in service after 1989

Qualified rehabilitation expenditures related to rental real estate

activities

bCredits

12b

Credits (other than credits shown on lines 12a and 12b) related

to rental real estate activities

c See page 8 of PartnersInstructions for Schedule K-1(Form 1065).

12c

Credits related to other rental activitiesd 12d

Other credits13 13

Schedule K-1 (Form 1065) 2000For Paperwork Reduction Act Notice, see Instructions for Form 1065.

Cat. No. 11394R

12,000

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Form 8582-CR, Passive Activity Credit Limitations.

Step 1. Mr. Jones will need the following forms to report the low-income housing credit:

Mr. Jones follows the instructions for line 12a of Schedule K-1 and enters the employer identification number (EIN) of the partnershipand the $12,000 low-income housing credit on line 5 of Form 8586, and completes line 6.

Form 8586, Low-Income Housing Credit.

John and Mary Jones 123-00-4567

10 5566650 12,000

12,000

Step 2. Line 7 of Form 8586 asks for the passive activity credit for 2000. The amount is figured on Form 8582-CR and the worksheets.

Worksheet 3 for Lines 3a and 3b

Total. Enter on lines 3a and 3b of Form 8582-CR

Worksheet 3 of Form 8582-CR is used for post-1989 low-income housing credits.

(keep for your records)Prior YearUnallowed Credits

Current YearCredits

Total CreditsFromFormName of Activity

(c) Add cols. (a) and (b)(b) Credit line 3b(a) Credit line 3a

12,000Partnership A

12,000

8586

OMB No. 1545-0984

Form 8586 Low-Income Housing Credit

Department of the TreasuryInternal Revenue Service

AttachmentSequence No. 36b Attach to your return.

Name(s) shown on return Identifying number

Current Year Credit (See instructions.)

Number of Forms 8609 attached 12Eligible basis of building(s) (total from attached Schedule(s) A (Form 8609), line 1)2

3aQualified basis of low-income building(s) (total from attached Schedule(s) A (Form 8609), line 3)3a

b Has there been a decrease in the qualified basis of any build ing(s) since the close of the preceding

(iv)(iii)(ii)(i)4Current year credit (total from attached Schedule(s) A (Form 8609), see instructions)4

If you are a Then enter total of current year housing credit(s) from

a Shareholder Schedule K-1 (Form 1120S), lines 12b(1) through (4)

5 Credits from pass-through entities (if from more than one entity, see instructions):

5

6 Add lines 4 and 5. (See instructions to find out if you complete lines 7 through 18 or file Form 3800.) 6

Part I

EIN of pass-through entity

7 Passive activity credit or total current year credit for 2000 (see instructions) 7

tax year?

building(s) that had a decreased basis. If more space is needed, attach a schedule to list the BINs.

Yes No If Yes, enter the building identification number (BIN) of the

b Partner

c Beneficiary

Schedule K-1 (Form 1065), lines 12a(1) through (4), orSchedule K-1 (Form 1065-B), box 8

Schedule K-1 (Form 1041), line 14

2000

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Mr. Jones follows the instructions for Worksheet 3 and enters the total credits from column (a) of that worksheet on line 3a of Form8582-CR. He enters the total credits on line 3c and completes lines 5 through 7 of the form. Mr. Jones can skip Parts II and III and goto Part IV because the only credit he has is from a post-1989 low-income housing rental real estate activity. He must also complete thecomputation for line 35 in the instructions to get the amount to enter on line 35 of the form.


12,000

-0-

12,000

12,000

12,000

12,000

9,435

-0-

9,435

12,000

12,000

OMB No. 1545-1034Passive Activity Credit LimitationsForm 8582-CR See separate instructions.

Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 89

Attach to Form 1040 or 1041.Identifying numberName(s) shown on return

2000 Passive Activity CreditsCaution: If you have credits from a publicly traded partnership, seePublicly Traded Partnerships (PTPs)on page 15

of the instructions.

Credits From Rental Real Estate Activities With Active Participation (Other Than RehabilitationCredits and Low-Income Housing Credits) (See Lines 1a through 1c on page 9.)

1aCredits from Worksheet 1, column (a)1a

1bb Prior year unallowed credits from Worksheet 1, column (b)

1cAdd lines 1a and 1bcRehabilitation Credits From Rental Real Estate Activities and Low-Income Housing Credits forProperty Placed in Service Before 1990 (or From Pass-Through Interests Acquired Before 1990)(See Lines 2a through 2c on page 9.)

2a2a Credits from Worksheet 2, column (a)

2bb Prior year unallowed credits from Worksheet 2, column (b)

c Add lines 2a and 2b 2c

Low-Income Housing Credits for Property Placed in Service After 1989 (See Lines 3a through3c on page 9.)

3aCredits from Worksheet 3, column (a)3a

3bPrior year unallowed credits from Worksheet 3, column (b)b 3cAdd lines 3a and 3bc

All Other Passive Activity Credits (See Lines 4a through 4c on page 9.)

4aCredits from Worksheet 4, column (a)4a4bPrior year unallowed credits from Worksheet 4, column (b)b

4cAdd lines 4a and 4bc5Add lines 1c, 2c, 3c, and 4c56Enter the tax attributable to net passive income (see page 9)6

7 Subtract line 6 from line 5. If line 6 is more than or equal to line 5, enter -0- and see page 10 7

Part I

Note: If your filing status is married filing separately and you lived with your spouse at any timeduring the year, do notcomplete Part II, III, or IV. Instead, go to line 37.

2000

Special Allowance for Low-Income Housing Credits for Property Placed in Service After 1989Note: Complete this part only if you have an amount on line 3c. Otherwise, go to Part V.

31If you completed Part III, enter the amount from line 19. Otherwise, subtract line 16 from line 731

Enter the amount from line 3032 32

33Subtract line 32 from line 31. If zero, enter -0- here and on line 3633

Enter the smaller of line 3c or line 3334 34

35Tax attributable to the remaining special allowance (see page 12)35

Enter the smaller of line 34 or line 3536 36

Part IV

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Step 3. After completing Form 8582-CR, Mr. Jones determines his allowed and unallowed credit. Because he has only one type ofcredit from a single passive activity, his allowed low-income housing credit for 2000 is the amount on line 37, or $9,435. His unallowedcredit of $2,565 is determined by subtracting the allowed credit on line 37 from the total credit on line 5 ($12,000 $9,435).

Step 4. Mr. Jones enters the allowed passive activity credit of $9,435 on line 7 of Form 8586 and completes Part II of that formaccording to the instructions for Form 8586. The unallowed credit of $2,565 is carried forward and used to figure the passive activitycredit allowed for 2001.

9,435


10 5566650 12,000

12,000

9,435

Line 35 computation:

Line 35. Figure the tax attributable to the remaining special allowance as follows:

Note: When using taxable income in the above computation, it is not necessary to refigure items that are based on a percentageof adjusted gross income.

305,000A. Taxable income

B.

C.

D.

Tax on line A. Use the Tax Table, Tax Rate Schedules, the Capital Gain Tax Worksheet, or Schedule D (Form 1040) (or ScheduleD (Form 1041)), whichever applies

E.

Enter $25,000 ($12,500 if married filing separate return and you and your spouse lived apart atall times during the year) 25,000

F.

Enter amount, if any, from line 9 of Form 8582 -0-

25,000

G.

Subtract line D from line C

280,000

H.

Subtract line E from line A

I.

Tax on line F. Use the Tax Table, Tax Rate Schedules, the Capital Gain Tax Worksheet, o r Schedule D (Form 1040) (or ScheduleD (Form 1041)), whichever applies 82,211

9,435

J.

Subtract line G from line B

Add lines 16 and 30 of Form 8582-CR and enter the total -0-

Tax attributable to the remaining special allowance. Subtract line I from line H. Enter the result on line 35 of Form 8582-CR 9,435

Mr. Jones completes Part V of Form 8582-CR:

91,646

OMB No. 1545-0984

Form 8586 Low-Income Housing Credit

Department of the TreasuryInternal Revenue Service

AttachmentSequence No. 36b Attach to your return.

Name(s) shown on return Identifying number

Current Year Credit (See instructions.)

Number of Forms 8609 attached 12Eligible basis of building(s) (total from attached Schedule(s) A (Form 8609), line 1)2

3aQualified basis of low-income building(s) (total from attached Schedule(s) A (Form 8609), line 3)3a

b Has there been a decrease in the qualified basis of any building(s) since the close of the preceding

(iv)(iii)(ii)(i)4Current year credit (total from attached Schedule(s) A (Form 8609), see instructions)4

If you are a Then enter total of current year housing credit(s) from

a Shareholder Schedule K-1 (Form 1120S), lines 12b(1) through (4)

5 Credits from pass-through entities (if from more than one entity, see instructions):

5

6 Add lines 4 and 5. (See instructions to find out if you complete lines 7 through 18 or file Form 3800.) 6

Part I

EIN of pass-through entity

7 Passive activity credit or total current year credit for 2000 (see instructions) 7

tax year?building(s) that had a decreased basis. If more space is needed, attach a schedule to list the BINs.Yes No If Yes, enter the building identification number (BIN) of the

b Partner

c Beneficiary

Schedule K-1 (Form 1065), lines 12a(1) through (4), orSchedule K-1 (Form 1065-B), box 8

Schedule K-1 (Form 1041), line 14

2000

Passive Activity Credit Allowed

37 Passive Activity Credit Allowed. Add lines 6, 16, 30, and 36. See page 12 to find out how toreport the allowed credit on your tax return and how to allocate allowed and unallowed credits ifyou have more than one credit or credits from more than one activity. If you have any credits froma publicly traded partnership, see Publicly Traded Partnerships (PTPs) on page 15 37

Part V

Page 8


9/16

Specific Instructions

Current Year CreditsConvert any current year qualifiedexpenditures into credits beforebeginning Worksheet 1, 2, 3, or 4.Form 3800, General BusinessCredit. Enter the credits from line 3

of Form 3800 in column (a) ofWorksheet 1, 2, 3, or 4. If the creditsare from more than one activity or areof more than one type, separate thecredits by activity or type beforemaking entries in the worksheets.

Example. You have a low-incomehousing credit from one activity anda research credit from a differentactivity. Enter the low-income housingcredit in column (a) of Worksheet 2and make a separate entry for theresearch credit in column (a) ofWorksheet 4.Form 8586, Low-Income Housing

Credit. If you are not required to fileForm 3800, enter the portion of thecredit attributable to passive activitiesfrom line 6 of Form 8586 in column(a) of Worksheet 2 or 3.Form 8834, Qualified ElectricVehicle Credit. Enter the creditsfrom line 10 of Form 8834 in column(a) of Worksheet 1 or 4. If the creditsare from more than one activity,separate the credits by activity beforemaking entries in the worksheet.Form 8844, Empowerment ZoneEmployment Credit. Enter the

credits from line 5 of Form 8844 incolumn (a) of Worksheet 1 or 4. If thecredits are from more than oneactivity, separate the credits byactivity before making entries in theworksheet.Nonconventional source fuelcredit. Figure your credit frompassive activities for fuel producedfrom a nonconventional source andenter the credit in column (a) ofWorksheet 4.

See section 29 for more informationon the credit for fuel produced from anonconventional source.

Prior Year UnallowedCreditsTo figure this year's PAC, you musttake into account any credits frompassive activities disallowed for prioryears and carried forward to this year.

If you had only one type of prioryear unallowed credit from a singlepassive activity, figure your prior yearunallowed credit by subtracting line37 of your 1999 Form 8582-CR fromline 5 of your 1999 Form 8582-CR.

Otherwise, your prior yearunallowed credits are the amountsshown in column (b) of Worksheet 9in the 1999 Instructions for Form8582-CR. Enter the prior year

unallowed credits in column (b) ofWorksheet 1, 2, 3, or 4, whicheverapply.

Part I2000 PassiveActivity CreditsUse Part I to combine your creditsfrom passive activities to determine ifyou have a PAC for 2000.

If your credits from all passiveactivities exceed the tax attributableto net passive income, you have aPAC for 2000. Generally, you have

net passive income if line 3 of Form8582 shows income. See theinstructions for line 6 of Form8582-CR on this page for otherdetails.Lines 1a through 1c. Individualsand qualifying estates that activelyparticipated in rental real estateactivities (other than rental real estateactivities with rehabilitation credits orlow-income housing credits) mustinclude the credits from theseactivities on lines 1a through 1c. UseWorksheet 1 to figure the amounts to

enter on lines 1a and 1b.See Active Participation in aRental Real Estate Activity on page3.

CAUTION

!Include the credits inWorksheet 4, but not inWorksheet 1, if you are

married filing a separate return andlived with your spouse at any timeduring the year, even if you activelyparticipated.

Note: You may take credits thatarose in a prior tax year (other thanlow-income housing and rehabilitation

credits) under the special allowanceonly if you actively participated in therental real estate activity for both thatprior year and this year. If you did notactively participate for both years,include the credits in Worksheet 4,but not in Worksheet 1.Lines 2a through 2c. Individuals(including limited partners) andqualifying estates who had

rehabilitation credits from rental realestate activities or low-incomehousing credits for property placed inservice before 1990 must include thecredits from those activities on lines2a and 2b. Use Worksheet 2 to figurethe amounts to enter on lines 2a and2b.

If you have low-income housingcredits for property placed in serviceafter 1989, include those credits in

Worksheet 3 instead of Worksheet 2.If you held an indirect interest in theproperty through a partnership, Scorporation, or other pass-throughentity, use Worksheet 3 only if youalso acquired your interest in thepass-through entity after 1989.

CAUTION

!Include the credits inWorksheet 4, but not inWorksheet 2 or Worksheet 3,

if you are married filing a separatereturn and lived with your spouse atany time during the year.

Lines 3a through 3c. Individuals

(including limited partners) andqualifying estates who hadlow-income housing credits fromrental real estate activities forproperty placed in service after 1989must include those credits on lines 3athrough 3c instead of Worksheet 2. Ifyou held an indirect interest in theproperty through a partnership, Scorporation, or other pass-throughentity, use lines 3a through 3c only ifyou also acquired your interest in thepass-through entity after 1989. UseWorksheet 3 to figure the amounts toenter on lines 3a and 3b.Lines 4a through 4c. Individualsmust include on lines 4a through 4ccredits from passive activities thatwere not entered on Worksheets 1,2, or 3. Trusts must include creditsfrom all passive activities inWorksheet 4. Use Worksheet 4 tofigure the amounts to enter on lines4a and 4b.Line 6. If line 3 of Form 8582 showsnet income or you did not completeForm 8582 because you had netpassive income, you must figure thetax on the net passive income. If you

have an overall loss on an entiredisposition of your interest in apassive activity, reduce net passiveincome, if any, on line 3 of Form 8582to the extent of the loss (but notbelow zero) and use only theremaining net passive income in thecomputation on page 10. If you hada net passive activity loss, enter zeroon line 6 and go on to line 7.

Page 9


10/16

Figure the tax on net passiveincome as follows.

Note: When using taxable income inthe above computation, it is notnecessary to refigure items that arebased on a percentage of adjustedgross income.Line 7. If line 7 is zero because thetax on the net passive income on line6 is greater than your credits frompassive activities on line 5, all yourcredits from passive activities areallowed. In this case, enter the

amount from line 5 on line 37 andreport the credits on the formsnormally used. Do not completeWorksheets 5 through 9.

Part IISpecial Allowancefor Rental Real EstateActivities With ActiveParticipation

CAUTION

!Married persons filing separatereturns who lived with theirspouses at any time during the

year arenoteligible to complete PartII.

Use Part II to figure the creditallowed if you have any credits fromrental real estate activities in whichyou actively participated (other thanrehabilitation credits and low-incomehousing credits). See RentalActivities on page 2 for details.Line 9. Married persons filingseparate returns who lived apart from

their spouses at all times during the

year must enter $75,000 on line 9instead of $150,000. Married personsfiling separate returns who lived withtheir spouses at any time during theyear are not eligible for the specialallowance. They must enter zero online 16 and go to line 17.Line 10. To figure modifiedadjusted gross income, combine allthe amounts used to figure adjustedgross income except:q Any passive activity loss as definedin section 469(d)(1);q Any rental real estate loss allowedunder section 469(c)(7) to real estateprofessionals (defined underActivities That Are Not PassiveActivities on page 1);q Any overall loss from a PTP;q The taxable amount of socialsecurity and tier 1 railroad retirementbenefits;q The deduction allowed undersection 219 for contributions to IRAsand certain other qualified retirement

plans;

A. Taxable income includingnet passive income .........

B. Tax on line A. Use the Tax Table, TaxRate Schedules, the Capital Gain TaxWorksheet, or Schedule D (Form1040) (or Schedule D (Form 1041)),whichever applies .................. .............

C. Taxable income withoutnet passive income .........

D. Tax on line C. Use the Tax Table, TaxRate Schedules, the Capital Gain Tax

Worksheet, or Schedule D (Form1040) (or Schedule D (Form 1041)),whichever applies .................. .............

E. Subtract line D from line B and enterthe result on line 6 of Form 8582-CR

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 estateactivities with active participation for the current year and line 1b for prior year unallowed credits from rental real estate activities withactive participation in both the prior year in which the credit arose and the current year. See Active Participation in a Rental RealEstate Activity on page 3 for a definition of active participation.

After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR andthen 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.

(keep for your records)Worksheet 1 for Lines 1a and 1bPrior Year

Unallowed CreditsCurrent Year

CreditsTotal Credits

FromFormName of Activity


otals. Enter on lines 1a and 1b of Form 8582-CR

Lines 2a and 2b. Use Worksheet 2 to figure the amounts to enter on lines 2a and 2b. Use line 2a for rehabilitation credits andlow-income housing credits from rental real estate activities for the current year and line 2b for prior year unallowed credits from thoseactivities. However, use Worksheet 3 instead of Worksheet 2 if you have any low-income housing credits for property placed in serviceafter 1989. If you held an indirect interest in the property through a partnership, S corporation, or other pass-through entity, useWorksheet 3 only if you also acquired your interest in the pass-through entity after 1989. Use this worksheet if you do not meet bothrequirements.


(keep for your records)orksheet 2 for Lines 2a and 2bPrior Year





otals. Enter on lines 2a and 2b of Form 8582-CR

Page 10


11/16

q The deduction allowed undersection 164(f) for one-half ofself-employment taxes;q The exclusion from income ofinterest from series EE and I U.S.savings bonds used to pay highereducation expenses;q The exclusion allowed undersection 137 for expenses related toadoption assistance programs; orq The student loan interest deduction.

Include in modified adjusted grossincome any portfolio income andexpenses that are clearly and directlyallocable to portfolio income. Alsoinclude any income that is treated asnonpassive income, such as overallgain from a PTP and net income froman activity or item of property subjectto the recharacterization of passiveincome rules. For information onrecharacterization of income, seePub. 925 or Temporary Regulationssection 1.469-2T(f) and Regulationssection 1.469-2(f).

When figuring modified adjustedgross income, any overall loss froman entire disposition of an interest ina passive activity is taken intoaccount as a nonpassive loss if youdo not have any net passive incomeafter combining net income andlosses from all other passive activities(that is, line 3 of Form 8582 is a lossor zero). If you do have net passiveincome when you combine the net

losses and net income from all otherpassive activities, the overall lossfrom the disposition is taken intoaccount as a nonpassive loss only tothe extent that it exceeds that netpassive income.Line 12. Do not enter more than$12,500 on line 12 if you are marriedfiling a separate return and you andyour spouse lived apart at all timesduring the year. Married persons filingseparate returns who lived with theirspouses at any time during the yearare not eligible for the special

allowance. They must enter zero online 16 and go to line 17.Line 15. Figure the tax attributableto the amount on line 14 as follows.

Note: When using taxable income inthe above computation, it is notnecessary to refigure items that arebased on a percentage of adjustedgross income.

A. Taxable income...............

B. Tax on line A. Use the Tax Table, TaxRate Schedules, the Capital Gain TaxWorksheet, or Schedule D (Form1040) (or Schedule D (Form 1041)),whichever applies .................. .............

C. Enter amount from line Aabove ..............................

D. Enter amount from line14 of Form 8582-CR.......

E. Subtract line D from lineC ......................................

F. Tax on line E. Use the Tax Table, TaxRate Schedules, the Capital Gain TaxWorksheet, or Schedule D (Form1040) (or Schedule D (Form 1041)),whichever applies .................. .............

G. Subtract line F from line B and enterthe result on line 15 of Form 8582-CR.

Lines 3a and 3b. Use Worksheet 3 to figure the amounts to enter on lines 3a and 3b for low-income housing credits for propertyplaced in service after 1989. If you held an indirect interest in the property through a partnership, S corporation, or other pass-throughentity, use Worksheet 3 only if you also acquired your interest in the pass-through entity after 1989. Use line 3a for the current yearcredits and line 3b for prior year unallowed credits for those activities.

Worksheet 3 for Lines 3a and 3b

Totals. Enter on lines 3a and 3b of Form 8582-CR


(keep for your records)Prior Year



From

FormName of Activity (c) Add cols. (a) and (b)(b) Credit line 3b(a) Credit line 3a

Lines 4a and 4b. Use Worksheet 4 to figure the amounts to enter on lines 4a and 4b. Use line 4a for credits from all other passiveactivities for the current year and line 4b for prior year unallowed credits from those activities.


(keep for your records)Worksheet 4 for Lines 4a and 4bPrior Year





Totals. Enter on lines 4a and 4b of Form 8582-CR

Page 11


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Part IIISpecial Allowancefor Rehabilitation CreditsFrom Rental Real EstateActivities and Low-IncomeHousing Credits forProperty Placed in ServiceBefore 1990 (or From

Pass-Through InterestsAcquired Before 1990)

CAUTION


year arenoteligible to complete PartIII.

Use Part III to figure the creditallowed if you have any rehabilitationcredits or low-income housing creditsfor property placed in service before1990. Also use this part if yourlow-income housing credit is from apartnership, S corporation, or otherpass-through entity in which youacquired your interest before 1990,regardless of the date the propertywas placed in service.Line 21. Married persons filingseparate returns who lived apart fromtheir spouses at all times during theyear must enter $125,000 on line 21,instead of $250,000.

Skip lines 21 through 26 if youcompleted Part II of this form andyour modified adjusted gross incomeon line 10 in Part II was $100,000 orless ($50,000 or less if married filing

separately and you lived apart fromyour spouse for the entire year).Instead, enter the amount from line15 on line 27.Line 24. Do not enter more than$12,500 on line 24 if you are marriedfiling a separate return and lived apartfrom your spouse for the entire year.Line 27. Figure the tax attributableto the amount on line 26 as follows.

Note: When using taxable income inthe above computation, it is notnecessary to refigure items that arebased on a percentage of adjustedgross income.

Part IVSpecial Allowancefor Low-Income HousingCredits for Property Placedin Service After 1989

CAUTION


year arenoteligible to complete PartIV.

Use Part IV to figure the creditallowed if you have any low-incomehousing credits for property placed inservice after 1989. If you held anindirect interest in the propertythrough a partnership, S corporation,or other pass-through entity, use PartIV only if your interest in thepass-through entity was also acquiredafter 1989.Line 35. Figure the tax attributableto the remaining special allowance asfollows.

Note: When using taxable income inthe above computation, it is notnecessary to refigure items that are

F. Tax on line E. Use the Tax Table, TaxRate Schedules, the Capital Gain TaxWorksheet, or Schedule D (Form 1040)(or Schedule D (Form 1041)),whichever applies ................. .................

based on a percentage of adjustedgross income.

Part VPassive ActivityCredit AllowedUse Part V to figure the PAC (asdetermined in Part I) that is allowedfor 2000 for all passive activities.Line 37. If you have only one type

of credit, the amount on line 37 is thecredit allowed for the year. Enter thisamount on the form where it isnormally reported. See ReportingAllowed Credits on Your TaxReturn below. Your unallowed creditis line 5 minus line 37.

Use Worksheets 5 through 9,whichever apply, on pages 13 and 14,to allocate the allowed and unallowedcredits if you have credits from morethan one activity. Also use theworksheets if you must allocate thecredits because they are reported ondifferent forms.

Keep a record of each unallowedcredit and the activity to which itbelongs so you may claim the creditif it becomes allowable in a futureyear.

Reporting Allowed Credits onYour Tax Return

Form 3800. Enter on line 5 of Form3800 the total passive activity generalbusiness credit allowed.Form 8586. If you are not requiredto file Form 3800, enter on line 7 ofForm 8586 any allowed low-income

housing credit.Form 8834. Enter on line 12 of Form8834 the passive activity qualifiedelectric vehicle credit allowed.Form 8844. Enter on line 7 of Form8844 the passive activityempowerment zone employmentcredit allowed.Nonconventional Source FuelCredit. If you have an allowedpassive activity credit for fuelproduced from a nonconventionalsource, see section 29 for limitationsand adjustments to the credit. Attach

a separate schedule to your tax returnshowing how you figured the credit.If you have both passive andnonpassive credits, combine thecredits before applying the limitationsand adjustments. Report the credit onthe line specified by the instructionsfor the tax return you file.

G. Subtract line F from line B and enter theresult on line 27 of Form 8582-CR .......

A. Taxable income.....................

B. Tax on line A. Use the Tax Table, TaxRate Schedules, the Capital Gain TaxWorksheet, or Schedule D (Form 1040)(or Schedule D (Form 1041)),

whichever applies ................. .................C. Enter $25,000

($12,500 if marriedfiling separatereturn and you andyour spouse livedapart at all timesduring the year) ....

D. Enter amount, ifany, from line 9 ofForm 8582 ............

E. Subtract line D from line C ...F. Subtract line E from line A....

G. Tax on line F. Use the Tax Table, TaxRate Schedules, the Capital Gain TaxWorksheet, or Schedule D (Form 1040)(or Schedule D (Form 1041)),whichever applies ................. .................

A. Taxable income.....................

B. Tax on line A. Use the Tax Table, TaxRate Schedules, the Capital Gain TaxWorksheet, or Schedule D (Form 1040)(or Schedule D (Form 1041)),whichever applies .................. ................

H. Subtract line G from line B....................I. Add lines 16 and 30 of Form 8582-CR

and enter the total ................ .................J. Tax attributable to the remainingspecial allowance. Subtract line I fromline H. Enter the result on line 35 ofForm 8582-CR.......................................

C. Enter amount from line Aabove ....................................

D. Enter amount from line 26 ofForm 8582-CR ......................

E. Subtract line D from line C ...

Page 12


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Instructions for Worksheet 5

Complete Worksheet 5 if you have an amount on line 1c of Form 8582-CR and you have credits from more than one activity.

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 theactivities in column (b). The total of all the ratios must equal 1.00.

Column (c). Multiply line 16 of Form 8582-CR by the ratios in column (b) and enter the result in column (c). If the total of this column isthe same as the total of column (a), all credits for the activities in column (a) of this worksheet are allowed. Report them on the formsnormally used, and complete Worksheet 6 if you have credits shown in Worksheet 2. Also complete Worksheet 7 or 8 if you havecredits 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. Alsocomplete Worksheet 6 or 7 if you have credits on line 2c or 3c of Form 8582-CR.

(keep for your records)Worksheet 5 for Credits on Line 1a or 1b

(b) Ratios(c) SpecialAllowance

(d) Subtractcolumn (c) from

column (a)(a) Credits

Form To BeReported onName of Activity

Totals 1.00

Instructions for Worksheet 6Complete Worksheet 6 if you have an amount on line 2c of Form 8582-CR and you have credits from more than one activity.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 theactivities in column (b). The total of all the ratios must equal 1.00.

Column (c). Multiply line 30 of Form 8582-CR by the ratios in column (b) and enter the result in column (c). If the total of this column isthe same as the total of column (a), all credits for the activities in column (a) of this worksheet are allowed. Report them on the formsnormally 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 formthe credit is reported on in Worksheet 8 and enter the amount from column (d) of this worksheet in column (a) of Worksheet 8.



column (a)

(c) SpecialAllowance

(b) Ratios(a) CreditsForm To BeReported onName of Activity

1.00Totals

Page 13


14/16

Instructions for Worksheet 8

Complete Worksheet 8 if you have credits on line 4c of Form 8582-CR from more than one activity or reported on different forms or youhave amounts in column (d) of Worksheets 5, 6, or 7.

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 in column (a) by the total of all the credits in column (a). The total of all the ratios must equal1.00.

Column (c). Complete the following computation:

A. Enter line 5 of Form 8582-CR

B. Enter line 37 of Form 8582-CR

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 allowedfor 2000.

(keep for your records)Worksheet 8Allocation of Unallowed Credits

(c) Unallowed Credits(b) Ratios(a) CreditsForm To Be

Reported onName of Activity

1.00Totals

Instructions for Worksheet 9Column (a). Enter all the activities shown in Worksheet 8. The credits entered in column (a) of this worksheet are the credits shown incolumn (c) of Worksheets 1, 2, 3, and 4 for the activities listed in Worksheet 8.Column (b). Enter the amounts from column (c) of Worksheet 8 in this column. These are your unallowed credits for 2000.

Column (c). Subtract column (b) from column (a). These are the allowed credits for 2000. Report the amounts in this column on the

forms normally used. See Reporting Allowed Credits on Your Tax Return on page 12.(keep for your records)Worksheet 9Allowed Credits

(c) Allowed Credits(b) Unallowed Credits(a) CreditsForm To BeReported on

Name of Activity

Totals

Instructions for Worksheet 7Complete Worksheet 7 if you have credits on line 3c of Form 8582-CR 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 theactivities in column (b). The total of all the ratios must equal 1.00.Column (c). Multiply line 36 of Form 8582-CR by the ratios in column (b) and enter the result in column (c). If the total of this column isthe same as the total of column (a), all credits for the activities in column (a) of this worksheet are allowed. Report them on the formsnormally used, and complete Worksheet 8 if you have credits shown in Worksheet 4 or amounts in column (d) of Worksheet 5 or 6. Ifthe 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 formthe credit is reported on in Worksheet 8 and enter the amount from column (d) of this worksheet in column (a) of Worksheet 8.



column (a)

(c) SpecialAllowance

(b) Ratios(a) CreditsForm To BeReported on

Name of Activity

1.00Totals

Page 14


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Publicly TradedPartnerships (PTPs)A PTP is a partnership whoseinterests are traded on an establishedsecurities market or are readilytradable on a secondary market (or itssubstantial equivalent).

An established securities marketincludes any national securitiesexchange and any local exchange

registered under the SecuritiesExchange Act of 1934 or exemptedfrom registration because of thelimited volume of transactions. It alsoincludes any over-the-counter market.

A secondary market generallyexists if a person stands ready tomake a market in the interest. Aninterest is treated as readily tradableif the interest is regularly quoted bypersons, such as brokers or dealers,who are making a market in theinterest.

The substantial equivalent of a

secondary market exists if there is noidentifiable market maker, but holdersof interests have a readily available,regular, and ongoing opportunity tosell or exchange their intereststhrough a public means of obtainingor providing information on offers tobuy, sell, or exchange interests.Similarly, the substantial equivalentof a secondary market exists ifprospective buyers and sellers havethe opportunity to buy, sell, orexchange interests in a timeframeand with the regularity and continuitythat the existence of a market maker

would provide.Credits From PTPs

A credit from a passive activity heldthrough a PTP is allowed to theextent of the tax attributable to netpassive income from that partnership.In addition, rehabilitation credits andlow-income housing credits fromrental real estate activities heldthrough PTPs are allowed to theextent of any special allowance thatremains after taking into accountlosses and credits from rental realestate activities not owned through

PTPs. See Active Participation in aRental Real Estate Activity on page3.

CAUTION

!Do notenter credits fromPTPs on the worksheets or onForm 8582-CR. Instead, use

the following steps to figure theallowed and unallowed credits frompassive activities held through PTPs.

Computation of AllowedPassive Activity Credits FromPTPs

Complete Steps 1 and 2 only if youhave net passive income from a PTPwith passive activity credits (includingprior year unallowed credits).Step 1. Figure the tax attributable tonet passive income from each PTPwith passive activity credits (including

prior year unallowed credits) byfollowing the steps shown in theworksheet in the line 6 instructions onpage 9. Complete a separate taxcomputation for each PTP with netpassive income.Step 2. Passive activity credits fromeach PTP are allowed to the extentof the tax attributable to net passiveincome from the same PTP. Creditsin excess of the tax attributable to netpassive income may be allowedunder one or more steps below.

Complete Steps 3 through 5 only ifyour passive activity credits (including

prior year unallowed credits) includerehabilitation credits from rental realestate activities from PTPs,low-income housing credits forproperty placed in service before1990 from PTPs, or low-incomehousing credits from PTPs in whichyou acquired your interest before1990 (regardless of the date placedin service).Step 3. Reduce rehabilitation creditsfrom rental real estate activities fromeach PTP, low-income housingcredits for property placed in service

before 1990 from each PTP, and anylow-income housing credits (includingprior year unallowed credits) fromeach PTP in which you acquired yourinterest before 1990 (regardless ofthe date placed in service) to theextent of the tax, which was figuredin Step 1, attributable to net passiveincome from that PTP.Step 4. Before beginning this step,complete Form 8582-CR if you haveany passive credits that are not fromPTPs. Subtract the total of lines 16,30, and 36, if any, of Form 8582-CR,from the amount on line 27 of Form

8582-CR, to figure the tax attributableto the special allowance available forthe credits in Step 3.

If your only passive credits are fromPTPs, complete lines 21 through 27of Form 8582-CR as a worksheet.The amount on line 27 is the taxattributable to the special allowanceavailable for the credits in Step 3.Step 5. Rehabilitation credits fromrental real estate activities of PTPs,low-income housing credits for

property placed in service before1990 by PTPs, and low-incomehousing credits from PTPs in whichyou acquired your interest before1990 (regardless of the date placedin service) allowed under the specialallowance are the smaller of the totalcredits from Step 3 or the amountfigured in Step 4. If Step 4 is smallerthan Step 3, allocate the amount inStep 4 pro rata to the credits from

each PTP in Step 3.Note: Complete Steps 6 through 8only if you have low-income housingcredits (including prior year unallowedcredits) for property placed in serviceafter 1989 from a PTP in which youacquired your interest after 1989.Step 6. Reduce low-income housingcredits (including prior year unallowedcredits) for property placed in serviceafter 1989 from each PTP in whichyou also acquired your interest after1989 to the extent of the taxattributable to net passive incomefrom that PTP, which was figured inStep 1.Step 7. Before beginning this step,complete Form 8582-CR if you haveany passive credits that are not fromPTPs. Subtract the sum of the creditsallowed in Step 5 above and line 36of Form 8582-CR from the amount online 35 of Form 8582-CR to figure thetax attributable to the specialallowance available for the credits inStep 6.

If your only passive credits are fromPTPs, complete the steps shown inthe worksheet in the line 35

instructions on page 12. Subtract thecredits allowed in Step 5 above fromthe tax figured on line J of thatworksheet. The result is the taxattributable to the special allowanceavailable for the credits in Step 6.Step 8. Low-income housing creditsallowed under the special allowancefor property placed in service after1989 from a PTP in which you alsoacquired your interest after 1989 arethe smaller of the total credits fromStep 6 or the amount figured in Step7. If Step 7 is smaller than Step 6,allocate the amount in Step 7 pro ratato the credits from each PTP in Step6.Step 9. Add the credits from Steps2, 5, and 8. These are the total creditsallowed from passive activities ofPTPs.Step 10. Figure the allowed andunallowed credits from each PTP.Report the allowed credits on theforms normally used. Keep a recordof the unallowed credits to be carriedforward to 2001.

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Part VIElection ToIncrease Basis of CreditPropertyComplete Part VI if you disposed ofyour entire interest in a passiveactivity and elect to increase the basisof the credit property used in theactivity by the unallowed credit that

reduced the basis of the property.Line 38. Check the box if you electto increase the basis of creditproperty used in a passive activity bythe unallowed credit that reduced theproperty's basis. The election isavailable for a fully taxable dispositionof an entire interest in an activity forwhich a basis adjustment was madeas a result of placing in serviceproperty for which a credit was taken.You may elect to increase the basisof the credit property immediatelybefore the disposition (by an amountno greater than the amount of the

original basis reduction) to the extentthat the credit had not been allowed

previously because of the passivecredit limitations. The amount of theunallowed credit that may be appliedagainst tax is reduced by the amountof the basis adjustment.

No basis adjustment may beelected on a partial disposition of yourinterest in a passive activity or if thedisposition is not fully taxable. Theamount of any unallowed credit,however, remains available to offset

the tax attributable to net passiveincome.

Paperwork Reduction Act Notice.We ask for the information on thisform to carry out the Internal Revenuelaws of the United States. You arerequired to give us the information.We need it to ensure that you arecomplying with these laws and toallow us to figure and collect the rightamount of tax.

You are not required to provide theinformation requested on a form thatis subject to the Paperwork Reduction

Act unless the form displays a validOMB control number. Books orrecords relating to a form or itsinstructions must be retained as longas their contents may becomematerial in the administration of anyInternal Revenue law. Generally, taxreturns and return information areconfidential, as required by section6103.

The time needed to complete and

file this form will vary depending onindividual circumstances. Theestimated average time is:

If you have comments concerningthe accuracy of these time estimatesor suggestions for making this formsimpler, we would be happy to hearfrom you. See the instructions for thetax return with which this form is filed.

Recordkeeping .................. ................. .. 2 hr., 5 min.

Learning about the law or the form .. 6 hr., 5 min.

Preparing the form ................ .............. 4 hr., 21 min.

Copying, assembling, and sendingthe form to the IRS.............................. 2 hr., 11 min.

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Documents

US Internal Revenue Service: i8582cr--2000