U.S. Income Tax Return for Estates and Trusts

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

Passive Activity Credit Limitations

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Section references are to the Internal Revenue Code
unless otherwise noted.

General Instructions

Future Developments

For the latest developments related to Form 8582-CR and
its instructions, such as legislation enacted after they were
published, go to IRS.gov/Form8582CR.

Purpose of Form

Form 8582-CR is used by noncorporate taxpayers to
figure the amount of any passive activity credit (PAC) for
the current tax year (including any prior year unallowed
credits) and the amount of credit allowed for the current
year. It is also used to make the election to increase the
basis of credit property when a taxpayer disposes of his or
her interest in an activity.
PACs that aren’t allowed in the current year are carried
forward until they are allowed against the tax on either net
passive income or the special allowance, if applicable.
Different rules apply to your activities and the related
credit, depending on the type of activity. Generally,
passive activities include:
• Trade or business activities in which you didn’t
materially participate for the tax year.
• Rental activities, regardless of your participation.
See Trade or Business Activities and Rental Activities,
later.
For more information, see Pub. 925, Passive Activity
and At-Risk Rules.
Note. Corporations subject to the passive activity rules
must use Form 8810, Corporate Passive Activity Loss and
Credit Limitations.

Who Must File

Form 8582-CR is filed by individuals, estates, and trusts
with any of the following credits from passive activities.
• General business credits.
• Qualified plug-in electric and electric vehicle credit.

Overview of Form

The form contains six parts. The Specific Instructions
include, at the beginning of the instructions for each part,
a brief explanation of the purpose or use of that part.
These explanations give a general overview of how the
form works.

Activities That Aren’t Passive
Activities
The following aren’t passive activities.
Dec 3, 2024

1. Trade or business activities in which you materially
participated for the tax year.
2. Any rental real estate activity in which you materially
participated if you were a “real estate professional” for the
tax year. You were a real estate professional only if:
a. More than half of the personal services you
performed in trades or businesses during the tax year
were performed in real property trades or businesses in
which you materially participated, and
b. You performed more than 750 hours of services
during the tax year in real property trades or businesses in
which you materially participated.

For purposes of item 2, each interest in rental real
estate is a separate activity unless you elect to treat all
interests in rental real estate as one activity. See
Regulations section 1.469–9(g)(3) for details.
If you are married filing jointly, one spouse must
separately meet both 2a and 2b without taking into
account services performed by the other spouse.
A real property trade or business is any real property
development, redevelopment, construction,
reconstruction, acquisition, conversion, rental, operation,
management, leasing, or brokerage trade or business.
Services you performed as an employee aren’t treated
as performed in a real property trade or business unless
you owned more than 5% of the stock (or more than 5% of
the capital or profits interest) in the employer.
3. A working interest in an oil or gas well. Your working
interest must be held directly or through an entity that
doesn’t limit your liability (such as a general partner
interest in a partnership). In this case, it doesn’t matter
whether you materially participated in the activity for the
tax year.
If, however, your liability was limited for part of the year
(for example, you converted your general partner interest
to a limited partner interest during the year), some of your
income and losses from the working interest may be
treated as passive activity gross income and passive
activity deductions. See Temporary Regulations section
1.469-1T(e)(4)(ii).
4. The rental of a dwelling unit you used as a
residence if section 280A(c)(5) applies. This section
applies if you rented out a dwelling unit that you also used
as a home during the year for a number of days that
exceeds the greater of 14 days or 10% of the number of
days during the year that the home was rented at a fair
rental.
5. An activity of trading personal property for the
account of owners of interests in the activity. For purposes
of this rule, personal property means property that is

Instructions for Form 8582CR (Rev. 12-2024) Catalog Number 64649B
Department of the Treasury Internal Revenue Service www.irs.gov

actively traded such as stocks, bonds, and other
securities. See Temporary Regulations section
1.469-1T(e)(6).
Generally, credits from these activities aren’t entered on
Form 8582-CR. However, credits from these activities may
be subject to limitations other than the passive credit
limitation rules.

holding the property is to realize a gain from its
appreciation and the gross rental income is less than 2%
of the smaller of the unadjusted basis or the fair market
value (FMV) of the property.
Unadjusted basis is the cost of the property without
regard to depreciation deductions or any other basis
adjustment described in section 1016.
The rental of property is incidental to a trade or
business activity if:
a. You own an interest in the trade or business activity
during the tax year,
b. The rental property was mainly used in the trade or
business activity during the tax year or during at least 2 of
the 5 preceding tax years, and
c. The gross rental income from the property is less
than 2% of the smaller of the unadjusted basis or the FMV
of the property.
Lodging provided for the employer's convenience to an
employee or the employee's spouse or dependents is
incidental to the activity or activities in which the employee
performs services.
4. You customarily make the rental property available
during defined business hours for nonexclusive use by
various customers.
5. You provide property for use in a nonrental activity
of a partnership, S corporation, or joint venture in your
capacity as an owner of an interest in the partnership, S
corporation, or joint venture.

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Rental Activities

A rental activity is a passive activity even if you materially
participated in the activity (unless it’s a rental real estate
activity in which you materially participated and you were
a real estate professional).

However, if you meet any of the five exceptions listed
below, the rental of the property isn’t treated as a rental
activity. See Reporting Credits From the Activities, later, if
you meet any of the exceptions.

An activity is a rental activity if tangible property (real or
personal) is used by customers or held for use by
customers and the gross income (or expected gross
income) from the activity represents amounts paid (or to
be paid) mainly for the use of the property. It doesn’t
matter whether the use is under a lease, a service
contract, or some other arrangement.

Exceptions

An activity isn’t a rental activity if any of the following
exceptions are met.
1. The average period of customer use is:
a. 7 days or less, or
b. 30 days or less and significant personal services
were provided in making the rental property available for
customer use.

Figure the average period of customer use for a class
of property by dividing the total number of days in all rental
periods by the number of rentals during the tax year. If the
activity involves renting more than one class of property,
multiply the average period of customer use of each class
by the ratio of the gross rental income from that class to
the activity's total gross rental income. The activity's
average period of customer use equals the sum of these
class-by-class average periods weighted by gross
income. See Regulations section 1.469-1(e)(3)(iii).
Significant personal services include only services
performed by individuals. To determine if personal
services are significant, all relevant facts and
circumstances are considered. Facts and circumstances
include the frequency of the services, the type and
amount of labor required to perform the services, and the
value of the services relative to the amount charged for
use of the property.
2. Extraordinary personal services were provided in
making the rental property available for customer use.
This applies only if the services are performed by
individuals and the customers' use of the rental property is
incidental to their receipt of the services.
3. Rental of the property is incidental to a nonrental
activity.
The rental of property is incidental to an activity of
holding property for investment if the main purpose of
2

Reporting Credits From the Activities

If an activity meets any of the five exceptions listed above,
it isn’t a rental activity. You must then determine:
1. Whether your rental of the property is a trade or
business activity (see Trade or Business Activities, later);
and, if so,
2. Whether you materially participated in the activity
for the tax year (see Material Participation, later).

• If the activity is a trade or business activity in which you
didn’t materially participate, enter the credits from the
activity on Worksheet 4, later.
• If the activity is a trade or business activity in which you
did materially participate, report the credits from the
activity on the forms you normally use.
If the rental activity didn’t meet any of the five
exceptions, it is generally a passive activity. Special rules
apply if you conduct the rental activity through a publicly
traded partnership (PTP). See Publicly Traded
Partnerships (PTPs), later.
If the rental activity isn’t conducted through a PTP, the
passive rental activity is entered in Worksheet 1, 2, 3, or 4.
Worksheet 1 is for credits (other than rehabilitation
credits and low-income housing credits) from passive
rental real estate activities in which you actively
participated. See Special Allowance for Rental Real
Estate Activities, later.
Worksheet 2 is for rehabilitation credits from passive
rental real estate activities and low-income housing
credits for property placed in service before 1990. This
Instructions for Form 8582-CR (Rev. 12-2024)

worksheet is also used for low-income housing credits
from a partnership, S corporation, or other pass-through
entity if your interest in the pass-through entity was
acquired before 1990, regardless of the date the property
was placed in service.
Worksheet 3 is for low-income housing credits for
property placed in service after 1989 (unless held through
a pass-through entity in which you acquired your interest
before 1990).

You may be treated as actively participating if, for
example, you participated in making management
decisions or arranging for others to provide services (such
as repairs) in a significant and bona fide sense.
Management decisions that may count as active
participation include:
• Approving new tenants,
• Deciding on rental terms,
• Approving capital or repair expenditures, and
• Other similar decisions.

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Worksheet 4 is for credits from passive trade or
business activities in which you didn’t materially
participate and passive rental real estate activities in
which you didn’t actively participate (but not rehabilitation
credits from passive rental real estate activities or
low-income housing credits).

Special Allowance for Rental Real Estate
Activities

If you actively participated in a passive rental real estate
activity, you may be able to claim credits from the activity
for the tax attributable to a special allowance of up to
$25,000, reduced by any passive losses, including the
commercial revitalization deduction, allowed under this
exception on Form 8582, Passive Activity Loss
Limitations.

The special allowance also applies to low-income
housing credits and rehabilitation credits from a rental real
estate activity, even if you didn’t actively participate in the
activity. The credits allowed under the special allowance
are in addition to the credits allowed for the tax attributable
to net passive income.

The special allowance isn’t available if you were
married at the end of the year, are filing a separate return
for the year, and lived with your spouse at any time during
the year.
Only an individual, a qualifying estate, or a qualified
revocable trust that made an election to treat the trust as
part of the decedent's estate may actively participate in a
rental real estate activity. Unless future regulations provide
an exception, limited partners aren’t treated as actively
participating in a partnership's rental real estate activity.
A qualifying estate is the estate of a decedent for tax
years ending less than 2 years after the date of the
decedent's death if the decedent would have satisfied the
active participation requirements for the rental real estate
activity for the tax year the decedent died.
A qualified revocable trust may elect to be treated as
part of a decedent's estate for purposes of the special
allowance for active participation in rental real estate
activities. The election must be made by both the executor
(if any) of the decedent's estate and the trustee of the
revocable trust. For details, see Regulations section
1.645-1.
You aren’t considered to actively participate in a rental
real estate activity if at any time during the tax year your
interest (including your spouse's interest) in the activity
was less than 10% (by value) of all interests in the activity.
Active participation is a less stringent requirement than
material participation (see Material Participation, later).
Instructions for Form 8582-CR (Rev. 12-2024)

The maximum special allowance is:

• $25,000 for single individuals and married individuals

filing a joint return for the tax year.
• $12,500 for married individuals who file separate
returns for the tax year and who lived apart from their
spouses at all times during the tax year.
• $25,000 for a qualifying estate reduced by the special
allowance for which the surviving spouse qualified.

Modified adjusted gross income limitation. If your
modified adjusted gross income (defined in the
instructions, later) is $100,000 or less ($50,000 or less if
married filing separately), figure your credits based on the
amount of the maximum special allowance referred to in
the preceding paragraph.

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

Generally, if your modified adjusted gross income is
$150,000 or more ($75,000 or more if married filing
separately), there is no special allowance.
However, for low-income housing credits for property
placed in service before 1990 and for rehabilitation
credits, the limits on modified adjusted gross income are
increased. If your modified adjusted gross income is more
than $200,000 ($100,000 if married filing separately) but
less than $250,000 ($125,000 if married filing separately),
your special allowance is limited to 50% of the difference
between $250,000 ($125,000 if married filing separately)
and your modified adjusted gross income.
If your modified adjusted gross income is $250,000 or
more ($125,000 or more if married filing separately), there
is no special allowance.
No modified adjusted gross income limitation applies
when figuring the special allowance for low-income
housing credits for property placed in service after 1989
(other than from a pass-through entity in which you
acquired your interest before 1990).

Trade or Business Activities

A trade or business activity is an activity (other than a
rental activity or an activity treated as incidental to an
activity of holding property for investment) that:
1. Involves the conduct of a trade or business (within
the meaning of section 162),
2. Is conducted in anticipation of starting a trade or
business, or
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3. Involves research or experimental expenditures
deductible under section 174 (or that would be if you
chose to deduct rather than capitalize them).

Reporting Credits From the Activities
Trade or business activities with material participation. If you materially participated in a trade or business
activity, the activity isn’t a passive activity. Report the
credits from the activity on the forms you normally use.

materially participate under any of the material
participation tests (other than this fourth test).
5. You materially participated in the activity for any 5
(whether or not consecutive) of the 10 immediately
preceding tax years.
6. The activity is a personal service activity in which
you materially participated for any 3 (whether or not
consecutive) preceding tax years.
An activity is a personal service activity if it involves the
performance of personal services in the fields of health,
law, engineering, architecture, accounting, actuarial
science, performing arts, consulting, or in any other trade
or business in which capital isn’t a material incomeproducing factor.
7. Based on all the facts and circumstances, you
participated in the activity on a regular, continuous, and
substantial basis during the tax year.
You didn’t materially participate in the activity under this
seventh test, however, if you participated in the activity for
100 hours or less during the tax year.
Your participation in managing the activity doesn’t
count in determining whether you materially participated
under this test if:
a. Any person (except you) received compensation for
performing services in the management of the activity, or
b. Any individual spent more hours during the tax year
performing services in the management of the activity
than you did (regardless of whether the individual was
compensated for the management services).

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Trade or business activities without material participation. If you didn’t materially participate in a trade or
business activity, the activity is a passive activity.
Generally, you must use Worksheet 4, later, to figure the
amount to enter on Form 8582-CR for each trade or
business activity in which you didn’t materially participate.
However, if you held the activity through a PTP, special
rules apply. See Publicly Traded Partnerships (PTPs),
later.

Material Participation

For the material participation tests that follow, participation
generally includes any work done in connection with an
activity if you owned an interest in the activity at the time
you did the work. The capacity in which you did the work
doesn’t matter. However, work isn’t participation if:
• It isn’t work that an owner would customarily do in the
same type of activity, and
• One of your main reasons for doing the work was to
avoid the disallowance of losses or credits from the
activity under the passive activity rules.
Proof of participation. You may prove your participation
in an activity by any reasonable means. You don’t have to
maintain contemporaneous daily time reports, logs, or
similar documents if you can establish your participation
by other reasonable means. For this purpose, reasonable
means include, but aren’t limited to, identifying services
performed over a period of time and the approximate
number of hours spent performing the services during that
period, based on appointment books, calendars, or
narrative summaries.

Tests for individuals. You materially participated for the
tax year in an activity if you satisfy at least one of the
following tests.
1. You participated in the activity for more than 500
hours.
2. Your participation in the activity for the tax year was
substantially all of the participation in the activity of all
individuals (including individuals who didn’t own any
interest in the activity) for the year.
3. You participated in the activity for more than 100
hours during the tax year, and you participated at least as
much as any other individual (including individuals who
didn’t own any interest in the activity) for the year.
4. The activity is a significant participation activity for
the tax year, and you participated in all significant
participation activities during the year for more than 500
hours.
A significant participation activity is any trade or
business activity in which you participated for more than
100 hours during the year and in which you didn’t
4

Test for a spouse. Participation by your spouse during
the tax year in an activity you own may be counted as your
participation in the activity, even if your spouse didn’t own
an interest in the activity and whether or not you and your
spouse file a joint return for the tax year.
Test for investors. Work done as an investor in an
activity isn’t treated as participation unless you were
directly involved in the day-to-day management or
operations of the activity. For purposes of this test, work
done as an investor includes:
1. Studying and reviewing financial statements or
reports on operations of the activity,
2. Preparing or compiling summaries or analyses of
the finances or operations of the activity for your own use,
and
3. Monitoring the finances or operations of the activity
in a nonmanagerial capacity.

Special rules for limited partners. If you were a limited
partner in an activity, you generally didn’t materially
participate in the activity. You did materially participate in
the activity, however, if you met material participation test
1, 5, or 6 (see Tests for individuals, earlier) for the tax year.
However, for purposes of the material participation
tests, you aren’t treated as a limited partner if you also
were a general partner in the partnership at all times
during the partnership's tax year ending with or within your
tax year (or, if shorter, during the portion of the
partnership's tax year in which you directly or indirectly
owned your limited partner interest).
Instructions for Form 8582-CR (Rev. 12-2024)

Special rules for certain retired or disabled farmers
and surviving spouses of farmers. Certain retired or
disabled farmers and surviving spouses of farmers are
treated as materially participating in a farming activity if
the real property used in the activity meets the estate tax
rules for special valuation of farm property passed from a
qualifying decedent. See Temporary Regulations section
1.469-5T(h)(2).

a. The rental activity is insubstantial relative to the
trade or business activity or vice versa, or
b. Each owner of the trade or business activity has the
same proportionate ownership interest in the rental
activity. If so, the portion of the rental activity involving the
rental of property used in the trade or business activity
may be grouped with the trade or business activity.
2. An activity involving the rental of real property with
an activity involving the rental of personal property (except
personal property provided in connection with the real
property or vice versa).
3. Any activity with another activity in a different type of
business and in which you hold an interest as a limited
partner or as a limited entrepreneur if that other activity
engages in holding, producing, or distributing motion
picture films or videotapes; farming; leasing section 1245
property; or exploring for (or exploiting) oil and gas
resources or geothermal deposits.

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Estates and trusts. The PAC limitations apply to an
estate or trust. See Temporary Regulations sections
1.469-1T(b)(2) and (3). The rules for determining material
participation for this purpose haven’t yet been issued.

Grouping of Activities

Generally, one or more trade or business activities or
rental activities may be treated as a single activity if the
activities make up an appropriate economic unit for the
measurement of gain or loss under the passive activity
rules.

Whether activities make up an appropriate economic
unit depends on all the relevant facts and circumstances.
The factors given the greatest weight in determining
whether activities make up an appropriate economic unit
are:
1. Similarities and differences in types of trades or
businesses,
2. The extent of common control,
3. The extent of common ownership,
4. Geographical location, and
5. Interdependencies between or among the activities.

Example. You have a significant ownership interest in a
bakery and a movie theater in Baltimore and in a bakery
and a movie theater in Philadelphia. Depending on all the
relevant facts and circumstances, there may be more than
one reasonable method for grouping your activities. For
instance, the following groupings may or may not be
permissible.
• A single activity.
• A movie theater activity and a bakery activity.
• A Baltimore activity and a Philadelphia activity.
• Four separate activities.
Once you choose a grouping under these rules, you
must continue using that grouping in later tax years unless
a material change in the facts and circumstances makes it
clearly inappropriate.
The IRS may regroup your activities if your grouping
fails to reflect one or more appropriate economic units and
one of the primary purposes of your grouping is to avoid
the passive activity limitations.
Regrouping due to net investment income tax. You
may be able to regroup your activities if you’re subject to
the Net Investment Income Tax (NIIT) for the first time. For
detailed information, see Pub. 925 and Regulations
section 1.469-11(b)(3)(iv).
Limitation on grouping certain activities. The
following activities may not be grouped together.
1. A rental activity with a trade or business activity
unless the activities being grouped together make up an
appropriate economic unit and:
Instructions for Form 8582-CR (Rev. 12-2024)

Activities conducted through partnerships, S corporations, and C corporations subject to section 469.
Once a partnership or corporation determines its activities
under these rules, a partner or shareholder may use these
rules to group those activities with:
• Each other,
• Activities conducted directly by the partner or
shareholder, or
• Activities conducted through other partnerships and
corporations.
A partner or shareholder may not treat as separate
activities those activities grouped together by the
partnership or corporation.
Partial disposition of an activity. You may treat the
disposition of substantially all of an activity as a separate
activity if you can prove with reasonable certainty:
1. The prior year unallowed losses, if any, allocable to
the part of the activity disposed of; and
2. The net income or loss for the year of disposition
allocable to the part of the activity disposed of.

Disclosure Requirement

For tax years beginning after January 24, 2010, the
following disclosure requirements for groupings apply. You
are required to report certain changes to your groupings
that occur during the tax year to the IRS. If you fail to
report these changes, each trade or business activity or
rental activity will be treated as a separate activity. You will
be considered to have made a timely disclosure if you filed
all affected income tax returns consistent with the claimed
grouping and make the required disclosure on the income
tax return for the year in which you first discovered the
failure to disclose. If the IRS discovered the failure to
disclose, you must have reasonable cause for not making
the required disclosure. For more information on
disclosure requirements, see Revenue Procedure
2010-13 available at IRS.gov/irb/
2010-04_IRB#RP-2010-13.

New grouping. You must file a written statement with
your original income tax return for the first tax year in
which two or more activities are originally grouped into a
single activity. The statement must provide the names,
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addresses, and employer identification numbers (EINs), if
applicable, for the activities being grouped as a single
activity. In addition, the statement must contain a
declaration that the grouped activities make up an
appropriate economic unit for the measurement of gain or
loss under the passive activity rules.
Addition to an existing grouping. You must file a
written statement with your original income tax return for
the tax year in which you add a new activity to an existing
group. The statement must provide the name, address,
and EIN, if applicable, for the activity that is being added
and for the activities in the existing group. In addition, the
statement must contain a declaration that the activities
make up an appropriate economic unit for the
measurement of gain or loss under the passive activity
rules.

Form 3800, General Business Credit. Enter the credits
from Form 3800, lines 2, 23, and 32, in column (a) of
Worksheet 1, 2, 3, or 4.
Form 8834, Qualified Electric Vehicle Credit. See the
Instructions for Form 8834 for the amount to enter in
column (a) of Worksheet 1 or 4.

Prior Year Unallowed Credits

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Regrouping. You must file a written statement with your
original income tax return for the tax year in which you
regroup the activities. The statement must provide the
names, addresses, and EINs, if applicable, for the
activities that are being regrouped. If two or more activities
are being regrouped into a single activity, the statement
must contain a declaration that the regrouped activities
make up an appropriate economic unit for the
measurement of gain or loss under the passive activity
rules. In addition, the statement must contain an
explanation of why the original grouping was clearly
inappropriate or the nature of the material change in the
facts and circumstances that made the original grouping
clearly inappropriate.

Dispositions

Unallowed PACs, unlike unallowed passive activity losses,
aren’t allowed when you dispose of your interest in an
activity. However, you may elect to increase the basis of
the credit property by the amount of the original basis
reduction of the property to the extent that the credit hasn’t
been allowed under the passive activity rules. Unallowed
PACs that aren’t used to increase the basis of the credit
property are carried forward until they are allowed. To
make the election, complete Form 8582-CR, Part VI. No
basis adjustment may be elected on a partial disposition
of your interest in a passive activity.

Specific Instructions
Current Year Credits

Convert any current year qualified expenditures into
credits before beginning Worksheet 1, 2, 3, or 4. If the
credits are from more than one activity or are of more than
one type, separate the credits by activity and by type
before making entries in the worksheets.
For tax years beginning after 2024, line numbers
on the referenced forms may change. See the
CAUTION form instructions for the referenced forms on how
to report the current year passive activity credit.

!

Example. You have a low-income housing credit from
one activity and a research credit from a different activity.
Enter the low-income housing credit in column (a) of
Worksheet 2 or 3 and make a separate entry for the
research credit in column (a) of Worksheet 4.
6

To figure this year's PAC, you must take into account any
credits from passive activities disallowed for prior years
and carried forward to this year.
If you had only one type of prior year unallowed credit
from a single passive activity, figure your prior year
unallowed credit by subtracting line 37 of your prior year
Form 8582-CR from line 5 of your prior year Form
8582-CR.

Otherwise, your prior year unallowed credits are the
amounts shown in column (b) of Worksheet 9 in the prior
year Instructions for Form 8582-CR. Enter the prior year
unallowed credits in column (b) of Worksheet 1, 2, 3, or 4,
whichever applies.
You must adjust a prior year unallowed credit if
you had to recapture any part of the credit (for
CAUTION example, due to the early disposition of property)
or transfer the credit to a bankruptcy estate.

!

Part I—Passive Activity Credits

Use Part I to combine your credits from passive activities
to determine if you have a PAC for the current year.

If your credits from all passive activities exceed the tax
attributable to net passive income, you have a PAC for the
current year. Generally, you have net passive income if
line 3 of Form 8582 shows income. For more information,
see the instructions for Form 8582-CR, line 6.
Lines 1a through 1c. Individuals and qualifying estates
that actively participated in rental real estate activities
must include the credits (other than rehabilitation credits
or low-income housing credits) from these activities on
lines 1a through 1c. Use Worksheet 1 to figure the
amounts to enter on lines 1a and 1b.
See Part II—Special Allowance for Rental Real Estate
Activities With Active Participation, later.
If you are married filing a separate return and lived
with your spouse at any time during the year, even
CAUTION if you actively participated in the rental real estate
activity, include the credits in Worksheet 4, not in
Worksheet 1.

!

Note. You may take credits that arose in a prior tax year
(other than low-income housing and rehabilitation credits)
under the special allowance only if you actively
participated in the rental real estate activity for both that
prior year and this year. If you didn’t actively participate for
both years, include the credits in Worksheet 4, not in
Worksheet 1.
Lines 2a through 2c. Individuals (including limited
partners) and qualifying estates who had rehabilitation
credits from rental real estate activities or low-income
housing credits for property placed in service before 1990
Instructions for Form 8582-CR (Rev. 12-2024)

must include the credits from those activities on lines 2a
through 2c. Use Worksheet 2 to figure the amounts to
enter on lines 2a and 2b.
If you have low-income housing credits for property
placed in service after 1989, include those credits in
Worksheet 3 instead of Worksheet 2. If you held an
indirect interest in the property through a partnership, S
corporation, or other pass-through entity, use Worksheet 3
only if you also acquired your interest in the pass-through
entity after 1989.

income, you must figure the tax on the net passive
income. If you have an overall loss on an entire disposition
of your interest in a passive activity, reduce net passive
income, if any, on Form 8582, line 3, to the extent of the
loss (but not below zero) and use only the remaining net
passive income in the computation below. If you had a net
passive activity loss, enter -0- on line 6 and go to line 7.
Figure the tax on net passive income as follows.

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Lines 3a through 3c. Individuals (including limited
partners) and qualifying estates who had low-income
housing credits from rental real estate activities for
property placed in service after 1989 must include those
credits on lines 3a through 3c. If you held an indirect
interest in the property through a partnership, S
corporation, or other pass-through entity, use lines 3a
through 3c only if you also acquired your interest in the
pass-through entity after 1989. Use Worksheet 3 to figure
the amounts to enter on lines 3a and 3b.

Include the credits in Worksheet 4, but not in
Worksheet 2 or 3, if you are married filing a
CAUTION separate return and lived with your spouse at any
time during the year.

A. Taxable income including net
passive income . . . . . . .
B. Tax on line A*

. . .

. . . . . . . . . . . . . . . . . . . . .

C. Taxable income without net passive
income . . . . . . . . . . . . . . .
D. Tax on line C*

. . . . . . . . . . . . . . . . . . . . . .

E. Subtract line D from line B and enter the result on
Form 8582-CR, line 6 . . . . . . . . . . . . . . . .

.

* For Form 1040 or 1040-SR, use the Tax Table, Tax Computation Worksheet, or
other appropriate method you used to figure your tax. For Form 1041, use the Tax
Rate Schedule, Qualified Dividends Tax Worksheet, or Schedule D, whichever
applies.

!

Lines 4a through 4c. Individuals must include on lines
4a through 4c credits from passive activities that weren’t
entered on Worksheets 1, 2, or 3. Trusts must include
credits from all passive activities in Worksheet 4. Use
Worksheet 4 to figure the amounts to enter on lines 4a and
4b.
Line 6. If Form 8582, line 3, shows net income or you
didn’t complete Form 8582 because you had net passive

Note. When using taxable income in the above
computation, it isn’t necessary to refigure items that are
based on a percentage of adjusted gross income.

Line 7. If line 7 is zero because the tax on the net passive
income on line 6 is greater than your credits from passive
activities on line 5, all your credits from passive activities
are allowed. In this case, enter the amount from line 5 on
line 37 and report the credits on the forms normally used.
Don’t complete Worksheets 5 through 9.

Keep for Your Records

Worksheet 1 for Lines 1a and 1b

Lines 1a and 1b. Use Worksheet 1 to figure the amounts to enter on lines 1a and 1b. Use line 1a for credits from rental real estate activities with active
participation for the current year and line 1b for prior year unallowed credits from rental real estate activities with active participation in both the prior year in
which the credit arose and the current year. See Special Allowance for Rental Real Estate Activities, earlier, for a definition of active participation.
For credits from Form 3800, enter the source form (for example, Form 3468 or Form 6765) and “Form 3800, line” followed by the appropriate line number (2,
23, or 32) in the “From Form” column.
After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and then complete line 1c.
Note: Rehabilitation credits from rental real estate activities and low-income housing credits must be entered in Worksheet 2 or 3, whichever applies, even if
you actively participated in the activity.
Name of Activity

From Form

Current Year Credits

Prior Year Unallowed
Credits

Total Credits

(a) Credit line 1a

(b) Credit line 1b

(c) Add cols. (a) and (b)

Totals. Enter on lines 1a and 1b of Form 8582–CR . . . . . . . . . . . . . . . . .

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

7

Keep for Your Records

Worksheet 2 for Lines 2a and 2b

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

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Enter the source form (Form 3468 or Form 8586) and “Form 3800, line” followed by the appropriate line number (2, 23, or 32) in the “From Form” column.
After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and then complete line 2c.
Prior Year Unallowed
Current Year Credits
Total Credits
Credits
Name of Activity
From Form
(a) Credit line 2a

(b) Credit line 2b

(c) Add cols. (a) and (b)

Totals. Enter on lines 2a and 2b of Form 8582–CR . . . . . . . . . . . . . . . . .

Keep for Your Records

Worksheet 3 for Lines 3a and 3b

Lines 3a and 3b. Use Worksheet 3 to figure the amounts to enter on lines 3a and 3b for low-income housing credits for property placed in service after 1989.
If you held an indirect interest in the property through a partnership, S corporation, or other pass-through entity, use Worksheet 3 only if you also acquired your
interest in the pass-through entity after 1989. Use line 3a for the current year credits and line 3b for prior year unallowed credits for those activities.
Enter “Form 3800, line” followed by the appropriate line number (2, 23, or 32) in the “From Form” column.

After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and then complete line 3c.
Prior Year Unallowed
Current Year Credits
Total Credits
Credits
Name of Activity
From Form
(a) Credit line 3a

(b) Credit line 3b

(c) Add cols. (a) and (b)

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

Keep for Your Records

Worksheet 4 for Lines 4a and 4b

Lines 4a and 4b. Use Worksheet 4 to figure the amounts to enter on lines 4a and 4b. Use line 4a for all other passive activity credits for the current year and
line 4b for prior year unallowed credits from those activities.
For credits from Form 3800, enter the source form (for example, Form 3468 or Form 6765) and “Form 3800, line” followed by the appropriate line number (2,
23, or 32) in the “From Form” column.
After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and then complete line 4c.
Prior Year Unallowed
Current Year Credits
Total Credits
Credits
Name of Activity
From Form
(a) Credit line 4a

(b) Credit line 4b

(c) Add cols. (a) and (b)

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

8

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

Part II—Special Allowance for Rental
Real Estate Activities With Active
Participation

!

Married persons filing separate returns who lived
with their spouses at any time during the year
aren’t eligible to complete Part II.

nonpassive loss only to the extent that it exceeds that net
passive income.
Line 12. Don’t enter more than $12,500 on line 12 if you
are married filing a separate return and you and your
spouse lived apart at all times during the year. Married
persons filing separate returns who lived with their
spouses at any time during the year aren’t eligible for the
special allowance. They must enter -0- on line 16 and go
to line 17.

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CAUTION

Use Part II to figure the credit allowed if you have any
credits from rental real estate activities in which you
actively participated (other than rehabilitation credits and
low-income housing credits). See Rental Activities, earlier,
for details.

Line 9. Married persons filing separate returns who lived
apart from their spouses at all times during the year must
enter $75,000 on line 9 instead of $150,000. Married
persons filing separate returns who lived with their
spouses at any time during the year aren’t eligible for the
special allowance. They must enter -0- on line 16 and go
to line 17.

Line 10. To figure modified adjusted gross income,
combine all the amounts used to figure adjusted gross
income, except don’t take into account:
• Any passive activity loss as defined in section 469(d)
(1),
• Any rental real estate loss allowed to real estate
professionals (defined under Activities That Aren’t Passive
Activities, earlier),
• The taxable amount of social security and tier 1 railroad
retirement benefits,
• Deductible contributions to traditional individual
retirement accounts (IRAs) and section 501(c)(18)
pension plans,
• The deduction allowed for self-employment taxes,
• The exclusion from income of interest from series EE
and I U.S. savings bonds used to pay higher education
expenses,
• The exclusion of amounts received under an employer's
adoption assistance program,
• The student loan interest deduction,
• The tuition and fees deduction, or
• Foreign-derived intangible income and global intangible
low-taxed income.
Include in modified adjusted gross income any portfolio
income and expenses that are clearly and directly
allocable to portfolio income. Also include any income that
is treated as nonpassive income, such as overall gain from
a PTP and net income from an activity or item of property
subject to the recharacterization of passive income rules.
For information on recharacterization of income, see Pub.
925 or Temporary Regulations section 1.469-2T(f).
When figuring modified adjusted gross income, any
overall loss from an entire disposition of an interest in a
passive activity is taken into account as a nonpassive loss
if you don’t have any net passive income after combining
net income and losses from all other passive activities
(that is, Form 8582, line 3 is a loss or zero). If you do have
net passive income when you combine the net losses and
net income from all other passive activities, the overall
loss from the disposition is taken into account as a
Instructions for Form 8582-CR (Rev. 12-2024)

Line 15. Figure the tax attributable to the amount on
line 14 as follows.

Note. When using taxable income in the computation
below, it isn’t necessary to refigure items that are based
on a percentage of adjusted gross income.
A. Taxable income
B. Tax on line A*

. . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . .

C. Enter amount from Form 8582-CR,
line 14 . . . . . . . . . . . . . . . . .
D. Subtract line C from line A
E. Tax on line D*

. .

. . . . . . .

. . . . . . . . . . . . . . . . . . . . . . .

F. Subtract line E from line B and enter the result on Form
8582-CR, line 15 . . . . . . . . . . . . . . . . . . . . .

* For Form 1040 or 1040-SR, use the Tax Table, Tax Computation Worksheet, or
other appropriate method you used to figure your tax. For Form 1041, use the Tax
Rate Schedule, Qualified Dividends Tax Worksheet, or Schedule D, whichever
applies.

Part III—Special Allowance for
Rehabilitation Credits From Rental
Real Estate Activities and
Low-Income Housing Credits for
Property Placed in Service Before
1990 (or From Pass-Through Interests
Acquired Before 1990)

!

CAUTION

Married persons filing separate returns who lived
with their spouses at any time during the year
aren’t eligible to complete Part III.

Use Part III to figure the credit allowed if you have any
rehabilitation credits or low-income housing credits for
property placed in service before 1990. Also use this part
if your low-income housing credit is from a partnership, S
corporation, or other pass-through entity in which you
acquired your interest before 1990, regardless of the date
the property was placed in service.
Line 21. Married persons filing separate returns who
lived apart from their spouses at all times during the year
must enter $125,000 on line 21, instead of $250,000.
Skip lines 21 through 26 if you completed Part II of this
form and your modified adjusted gross income on line 10
was $100,000 or less ($50,000 or less if married filing
separately and you lived apart from your spouse for the
9

entire year). Instead, enter the amount from line 15 on
line 27.
Line 24. Don’t enter more than $12,500 on line 24 if you
are married filing a separate return and lived apart from
your spouse for the entire year.
Line 27. Figure the tax attributable to the amount on
line 26 as follows.

A. Taxable income
B. Tax on line A*

. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .

C. Enter $25,000 ($12,500 if married
filing a separate return and you
and your spouse lived apart at all
times during the year) . . . . .
D. Enter amount, if any, from Form
8582, line 10 . . . . . . . . . .

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A. Taxable income
B. Tax on line A*

. . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . .

C. Enter amount from Form 8582-CR,
line 26 . . . . . . . . . . . . . . . . .
D. Subtract line C from line A
E. Tax on line D*

. .

. . . . . . .

. . . . . . . . . . . . . . . . . . . . . .

F. Subtract line E from line B and enter the result on Form
8582-CR, line 27 . . . . . . . . . . . . . . . . . . . .

* For Form 1040 or 1040-SR, use the Tax Table, Tax Computation Worksheet, or
other appropriate method you used to figure your tax. For Form 1041, use the Tax
Rate Schedule, Qualified Dividends Tax Worksheet, or Schedule D, whichever
applies.

Note. When using taxable income in the above
computation, it isn’t necessary to refigure items that are
based on a percentage of adjusted gross income.

Part IV—Special Allowance for
Low-Income Housing Credits for
Property Placed in Service After 1989

!

CAUTION

Married persons filing separate returns who lived
with their spouses at any time during the year
aren’t eligible to complete Part IV.

Use Part IV to figure the credit allowed if you have any
low-income housing credits for property placed in service
after 1989. If you held an indirect interest in the property
through a partnership, S corporation, or other
pass-through entity, use Part IV only if your interest in the
pass-through entity was also acquired after 1989.
Line 35. Figure the tax attributable to the remaining
special allowance as follows.

E. Enter the amount, if any, from
Form 8582, line 14 . . . . . .

.

F. Subtract lines D and E from line C

G. Subtract line F from line A
H. Tax on line G*

. . . . . .

. . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . .

I. Subtract line H from line B

. . . . . . . . . . . . . . . . .

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

K. Tax attributable to the remaining special allowance.
Subtract line J from line I. Enter the result on Form
8582-CR, line 35 . . . . . . . . . . . . . . . . . . . .

. .

. . .

* For Form 1040 or 1040-SR, use the Tax Table, Tax Computation Worksheet, or
other appropriate method you used to figure your tax. For Form 1041, use the Tax
Rate Schedule, Qualified Dividends Tax Worksheet, or Schedule D, whichever
applies.

Note. When using taxable income in the above
computation, it isn’t necessary to refigure items that are
based on a percentage of adjusted gross income.

Part V—Passive Activity Credit
Allowed

Use Part V to figure the PAC (as determined in Part I) that
is allowed for the current year for all passive activities.

Line 37. If you have only one type of credit, the amount
on line 37 is the credit allowed for the year. Enter this
amount on the form where it is normally reported. See
Reporting Allowed Credits on Your Tax Return, later. Your
unallowed credit is line 5 minus line 37.
Use Worksheets 5 through 9, whichever apply, to
allocate the allowed and unallowed credits if you have
credits from more than one activity. Also use the
worksheets if you have more than one type of credit.
Keep a record of each unallowed credit and the activity
to which it belongs so you may claim the credit if it
becomes allowable in a future year.

Reporting Allowed Credits on Your Tax Return
For tax years beginning after 2024, line numbers
on the referenced forms may change. See the
CAUTION form instructions for the referenced forms on how
to report the passive activity credit allowed.

!

Form 3800. Enter on Form 3800, line 3, 24, and 33,
whichever apply, the passive activity general business
credits allowed.
Form 8834. See the Instructions for Form 8834 for
instructions on how to report the passive activity credit
allowed.
10

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

Keep for Your Records

Worksheet 5 for Credits on Line 1a or 1b

Instructions for Worksheet 5
Complete Worksheet 5 if you have an amount on Form 8582-CR, line 1c and you have credits from more than one activity. For credits to be reported on Form
3800, enter “Form 3800, line” followed by the appropriate line number (3, 24, or 33).
Column (a). Enter the credits from Worksheet 1, column (c), in column (a) of this worksheet.

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Column (b). Divide each of the credits shown in column (a) by the total of the credits in column (a) and enter the ratio for each of the activities in column (b).
The total of all the ratios must equal 1.00.

Column (c). Multiply Form 8582-CR, line 16 by the ratios in column (b) and enter the result in column (c). If the total of this column is the same as the total of
column (a), all credits for the activities in column (a) of this worksheet are allowed. Report them on the forms normally used, and complete Worksheet 6 if you
have credits shown in Worksheet 2. Also complete Worksheet 7 or 8 if you have credits shown in Worksheet 3 or 4. If the total of column (a) is more than the
total of column (c), complete column (d).

Column (d). Subtract column (c) from column (a) and enter the result in this column. Also enter the name of each activity and the form the credit is reported
on in Worksheet 8 and enter the amount from column (d) of this worksheet in column (a) of Worksheet 8. Also complete Worksheet 6 or 7 if you have credits on
Form 8582-CR, line 2c or 3c.
Name of Activity

Form To Be
Reported on

(a) Credits

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

(b) Ratios

(c) Special
Allowance

(d) Subtract
column (c) from
column (a)

1.00

Keep for Your Records

Worksheet 6 for Credits on Line 2a or 2b

Instructions for Worksheet 6
Complete Worksheet 6 if you have an amount on Form 8582-CR, line 2c and you have credits from more than one activity. For credits to be reported on Form
3800, enter “Form 3800, line” followed by the appropriate line number (3, 24, or 33).
Column (a). Enter the credits from Worksheet 2, column (c), in column (a) of this worksheet.
Column (b). Divide each of the credits shown in column (a) by the total of the credits in column (a) and enter the ratio for each of the activities in column (b).
The total of all the ratios must equal 1.00.

Column (c). Multiply Form 8582-CR, line 30 by the ratios in column (b) and enter the result in column (c). If the total of this column is the same as the total of
column (a), all credits for the activities in column (a) of this worksheet are allowed. Report them on the forms normally used, and complete Worksheet 7 or 8 if
you have credits shown in Worksheet 3 or 4 or amounts in column (d) of Worksheet 5. If the total of column (a) is more than the total of column (c), complete
column (d).
Column (d). Subtract column (c) from column (a) and enter the result in this column. Also enter the name of each activity and the form the credit is reported
on in Worksheet 8 and enter the amount from column (d) of this worksheet in column (a) of Worksheet 8.
Name of Activity

Form To Be
Reported on

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

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

(a) Credits

(b) Ratios

(c) Special
Allowance

(d) Subtract
column (c) from
column (a)

1.00

11

Keep for Your Records

Worksheet 7 for Credits on Line 3a or 3b
Instructions for Worksheet 7
Complete Worksheet 7 if you have credits on Form 8582-CR, line 3c and you have credits from more than one activity.
Column (a). Enter the credits from Worksheet 3, column (c), in column (a) of this worksheet.

Column (b). Divide each of the credits shown in column (a) by the total of the credits in column (a) and enter the ratio for each of the activities in column (b).
The total of all the ratios must equal 1.00.

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Column (c). Multiply Form 8582-CR, line 36 by the ratios in column (b) and enter the result in column (c). If the total of this column is the same as the total of
column (a), all credits for the activities in column (a) of this worksheet are allowed. Report them on the forms normally used, and complete Worksheet 8 if you
have credits shown in Worksheet 4 or amounts in column (d) of Worksheet 5 or 6. If the total of column (a) is more than the total of column (c), complete
column (d).
Column (d). Subtract column (c) from column (a) and enter the result in this column. Also enter the name of each activity and the form the credit is reported
on in Worksheet 8 and enter the amount from column (d) of this worksheet in column (a) of Worksheet 8.
Name of Activity

Form To Be
Reported on

(a) Credits

(c) Special
Allowance

(b) Ratios

(d) Subtract
column (c) from
column (a)

1.00

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

Keep for Your Records

Worksheet 8 – Allocation of Unallowed Credits

Instructions for Worksheet 8
Complete Worksheet 8 if you have credits on Form 8582-CR, line 4c from more than one activity or reported on different forms or you have amounts in column
(d) of Worksheets 5, 6, or 7. For credits to be reported on Form 3800, enter “Form 3800, line” followed by the appropriate line number (3, 24, or 33).
Column (a). Enter the amounts, if any, from column (c) of Worksheet 4 and column (d) of Worksheets 5, 6, and 7.

Column (b). Divide each of the credits shown in column (a) by the total of the credits in column (a) and enter the ratio for each of the activities in column (b).
The total of all the ratios must equal 1.00.
Column (c). Complete the following computation:
A. Enter Form 8582-CR, line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Enter Form 8582-CR, line 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Subtract line B from line A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Multiply line C by the ratios in column (b) and enter the results in column (c). Complete Worksheet 9 to determine the credits allowed for the current year.
Name of Activity

Form To Be
Reported on

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

12

(a) Credits

(b) Ratios

(c) Unallowed Credits

1.00

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

Worksheet 9 – Allowed Credits

Keep for Your Records

Instructions for Worksheet 9
Column (a). Enter all the activities shown in Worksheet 8. The credits entered in column (a) of this worksheet are the credits shown in column (c) of
Worksheets 1, 2, 3, and 4 for the activities listed in Worksheet 8. For credits to be reported on Form 3800, enter “Form 3800, line” followed by the appropriate
line number (3, 24, or 33).
Column (b). Enter the amounts from column (c) of Worksheet 8 in this column. These are your unallowed credits for the current year.

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Column (c). Subtract column (b) from column (a). These are the allowed credits for the current year. Report the amounts in this column on the forms normally
used. See Reporting Allowed Credits on Your Tax Return, in the instructions.
Form To Be
Name of Activity
(a) Credits
(b) Unallowed Credits
(c) Allowed Credits
Reported on

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

Publicly Traded Partnerships (PTPs)

A PTP is a partnership whose interests are traded on an
established securities market or are readily tradable on a
secondary market (or its substantial equivalent).

An established securities market includes any national
securities exchange and any local exchange registered
under the Securities Exchange Act of 1934 or exempted
from registration because of the limited volume of
transactions. It also includes any over-the-counter market.

A secondary market generally exists if a person stands
ready to make a market in the interest. An interest is
treated as readily tradable if the interest is regularly
quoted by persons, such as brokers or dealers, who are
making a market in the interest.

The substantial equivalent of a secondary market exists
if there is no identifiable market maker, but holders of
interests have a readily available, regular, and ongoing
opportunity to sell or exchange their interests through a
public means of obtaining or providing information on
offers to buy, sell, or exchange interests. Similarly, the
substantial equivalent of a secondary market exists if
prospective buyers and sellers have the opportunity to
buy, sell, or exchange interests in a timeframe and with the
regularity and continuity that the existence of a market
maker would provide.

Credits From PTPs

A credit from a passive activity held through a PTP is
allowed to the extent of the tax attributable to net passive
income from that partnership. In addition, rehabilitation
credits and low-income housing credits from rental real
estate activities held through PTPs are allowed to the
extent of any special allowance that remains after taking
into account losses and credits from rental real estate
activities not owned through PTPs. See Part II—Special
Allowance for Rental Real Estate Activities With Active
Participation, earlier.
Don’t enter credits from PTPs on the worksheets
or on Form 8582-CR. Instead, use the following
CAUTION steps to figure the allowed and unallowed credits
from passive activities held through PTPs.

!

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

Computation of Allowed Passive Activity Credits
From PTPs

Complete Steps 1 and 2 only if you have net passive
income from a PTP with passive activity credits (including
prior year unallowed credits).

Step 1. Figure the tax attributable to net passive income
from each PTP with passive activity credits (including prior
year unallowed credits) by following the steps shown in
the worksheet in the line 6 instructions. Complete a
separate tax computation for each PTP with net passive
income.

Step 2. Passive activity credits from each PTP are
allowed to the extent of the tax attributable to net passive
income from the same PTP. Credits in excess of the tax
attributable to net passive income may be allowed under
one or more steps below.
Complete Steps 3 through 5 only if your passive activity
credits (including prior year unallowed credits) include
rehabilitation credits from rental real estate activities from
PTPs, low-income housing credits for property placed in
service before 1990 from PTPs, or low-income housing
credits from PTPs in which you acquired your interest
before 1990 (regardless of the date placed in service).
Step 3. Reduce rehabilitation credits from rental real
estate activities from each PTP, low-income housing
credits for property placed in service before 1990 from
each PTP, and any low-income housing credits (including
prior year unallowed credits) from each PTP in which you
acquired your interest before 1990 (regardless of the date
placed in service) to the extent of the tax, which was
figured in Step 1, attributable to net passive income from
that PTP.
Step 4. Before beginning this step, complete Form
8582-CR if you have any passive credits that aren’t from
PTPs. 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 attributable to the special
allowance available for the credits in Step 3.
If your only passive credits are from PTPs, complete
lines 21 through 27 of Form 8582-CR as a worksheet. The
13

amount on line 27 is the tax attributable to the special
allowance available for the credits in Step 3.
Step 5. Rehabilitation credits from rental real estate
activities of PTPs, low-income housing credits for property
placed in service before 1990 by PTPs, and low-income
housing credits from PTPs in which you acquired your
interest before 1990 (regardless of the date placed in
service) allowed under the special allowance are the
smaller of the total credits from Step 3 or the amount
figured in Step 4. If Step 4 is smaller than Step 3, allocate
the amount in Step 4 pro rata to the credits from each PTP
in Step 3.
Complete Steps 6 through 8 only if you have
low-income housing credits (including prior year
unallowed credits) for property placed in service after
1989 from a PTP in which you acquired your interest after
1989.

Line 38. Check the box if you elect to increase the basis
of credit property used in a passive activity by the
unallowed credit that reduced the property's basis. The
election is available for a fully taxable disposition of an
entire interest in an activity for which a basis adjustment
was made as a result of placing in service property for
which a credit was taken. You may elect to increase the
basis of the credit property immediately before the
disposition (by an amount no greater than the amount of
the original basis reduction) to the extent that the credit
hadn’t been allowed previously because of the passive
activity credit limitations. The amount of the unallowed
credit that may be applied against tax is reduced by the
amount of the basis adjustment.
No basis adjustment may be elected on a partial
disposition of your interest in a passive activity or if the
disposition isn’t fully taxable. The amount of any
unallowed credit, however, remains available to offset the
tax attributable to net passive income.

TREASURY/IRS
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December 12, 2024
Step 6. Reduce low-income housing credits (including
prior year unallowed credits) for property placed in service
after 1989 from each PTP in which you also acquired your
interest after 1989 to the extent of the tax attributable to
net passive income from that PTP, which was figured in
Step 1.

Step 7. Before beginning this step, complete Form
8582-CR if you have any passive credits that aren’t from
PTPs. Subtract the sum of the credits allowed in Step 5
above and Form 8582-CR, line 36, from the amount on
Form 8582-CR, line 35, to figure the tax attributable to the
special allowance available for the credits in Step 6.
If your only passive credits are from PTPs, complete the
steps shown in the worksheet in the line 35 instructions.
Subtract the credits allowed in Step 5 above from the tax
figured on line K of that worksheet. The result is the tax
attributable to the special allowance available for the
credits in Step 6.

Step 8. Low-income housing credits allowed under the
special allowance for property placed in service after 1989
from a PTP in which you also acquired your interest after
1989 are the smaller of the total credits from Step 6 or the
amount figured in Step 7. If Step 7 is smaller than Step 6,
allocate the amount in Step 7 pro rata to the credits from
each PTP in Step 6.
Step 9. Add the credits from Steps 2, 5, and 8. These are
the total credits allowed from passive activities of PTPs.
Step 10. Figure the allowed and unallowed credits from
each PTP. Report the allowed credits on the forms
normally used. Keep a record of the unallowed credits to
be carried forward to next year.

Part VI—Election To Increase Basis of
Credit Property
Complete Part VI if you disposed of your entire interest in
a passive activity and elect to increase the basis of the
credit property used in the activity by the unallowed credit
that reduced the basis of the property.

14

Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the
information. We need it to ensure that you are complying
with these laws and to allow us to figure and collect the
right amount of tax.

You aren’t required to provide the information requested
on a form that is subject to the Paperwork Reduction Act
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Books or records relating to a form or its instructions must
be retained as long as their contents may become
material in the administration of any Internal Revenue law.
Generally, tax returns and return information are
confidential, as required by section 6103.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
burden for individual taxpayers filing this form is approved
under OMB control number 1545-0074 and is included in
the estimates shown in the instructions for their individual
income tax return. The estimated burden for all other
taxpayers who file this form is shown below.
Recordkeeping . . . . . . . . . . . . . . . .

2 hr., 4 min.

Learning about the law or the
form . . . . . . . . . . . . . . . . . . . . . . . .

6 hr., 4 min.

Preparing the form . . . . . . . . . . . . .

4 hr., 19 min.

Copying, assembling, and sending
the form to the IRS . . . . . . . . . . . . .

1 hr., 9 min.

If you have suggestions for making this form simpler,
we would be happy to hear from you. See the instructions
for the tax return with which this form is filed.

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