Page 248 - Individual Forms & Instructions Guide

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
mat as shown in Part II or III. However, or not allowed this year. Apply the basis receive a distribution, dispose of stock,
be sure to complete the “Totals” col- rules, at-risk rules, and passive activity or receive a loan repayment from an S
umns for lines 29a and 29b, or lines 34a loss rules to your loss on Schedule E. corporation), check the box on the ap-
and 34b, as appropriate. If you also If your loss is also subject to the ex- propriate line in Part III, column (e), and
completed Part I on more than one cess business loss rules, you figure that attach Form 7203 to your return.
Schedule E, use the same Schedule E on limitation separately on Form 461. Any If you had a loss from an S corpora-
which you entered the combined totals reduction to your loss due to the excess tion that was not allowed last year be-
in Part I. business loss rules will not be reflected cause of the basis rules, but all or part is
Tax preference items. If you are a on your Schedule E. See the Instructions allowed this year, see Line 27, later, for
partner, a shareholder in an S corpora- for Form 461 for more information. how to report it.
tion, or a beneficiary of an estate or Basis rules for partnerships. General- After applying the basis rules, the
trust, you must take into account your ly, you may not claim your share of a loss you report on Schedule E may be
share of preferences and adjustments partnership loss (including a capital further reduced by the at-risk rules and
from these entities for the alternative loss) to the extent that it is greater than passive activity loss rules.
minimum tax on Form 6251 or Sched- the adjusted basis of your partnership in-
ule I (Form 1041). terest at the end of the partnership's tax At-risk rules. If you have (a) a loss or
other deduction from any activity car-
year. Any losses and deductions not al- ried on as a trade or business or for the
Part II lowed this year because of the basis lim- production of income by the partnership
it can be carried forward indefinitely and
or S corporation, and (b) amounts in the
deducted in a later year subject to the activity for which you are not at risk,
Income or Loss From basis limit for that year. To figure the your loss may be limited. For more in-
Partnerships and S basis of your interest in a partnership, formation, see At-Risk Rules, earlier.
Corporations you can use the Worksheet for Adjusting If you are subject to the at-risk rules
the Basis of a Partner's Interest in the
If you are a member of a partnership or Partnership in the Partner's Instructions for any activity, check the box on the
joint venture or a shareholder in an S for Schedule K-1 (Form 1065). For appropriate line in Part II, column (f), of
corporation, use Part II to report your more details on the basis rules for part- Schedule E, and use Form 6198 to figure
share of the partnership or S corporation nerships, see Pub. 541. the amount of any deductible loss. If the
income (even if not received) or loss. If you had a loss from a partnership activity is nonpassive, enter any deducti-
ble loss from Form 6198 on the appro-
If you elected to be taxed as a that was not allowed last year because of priate line in Part II, column (i), of
! qualified joint venture instead the basis rules, but all or part is allowed Schedule E.
CAUTION of a partnership, follow the re- this year, see Line 27, later, for how to If you had a loss from the partnership
porting rules under Qualified Joint Ven- report it. or S corporation that was not allowed
ture, earlier. After applying the basis rules, the last year because of the at-risk rules, but
loss you report on Schedule E may be all or part is allowed this year, see
You should receive a Schedule K-1 further reduced by the at-risk rules and Line 27, later, for how to report it.
from the partnership or S corporation. passive activity loss rules.
You should also receive a copy of the Basis rules for S corporations. Gener- After applying the at-risk rules, the
Partner's or Shareholder's Instructions ally, the deduction for your share of ag- loss you report on Schedule E may be
for Schedule K-1. Your copy of Sched- gregate losses and deductions reported further reduced by the passive activity
ule K-1 and its instructions will tell you on Schedule K-1 (Form 1120-S) is limi- loss rules.
where on your return to report your ted to the basis of your stock (deter- Passive activity loss rules. For more
share of the items. If you did not receive mined with regard to distributions re- information about passive activity los-
these instructions with your Sched- ceived during the tax year) and loans ses, see Passive Activity Loss Rules, ear-
ule K-1, see your tax return instructions from you to the corporation. The basis lier.
for how to get tax forms, instructions, of your stock is generally figured at the If you have a passive activity loss, in
and publications. Do not attach Sched- end of the corporation's tax year. Any most cases you need to complete Form
ules K-1 to your return. Keep them for losses and deductions not allowed this 8582 to figure the amount of the loss to
your records. year because of the basis limit can be enter in Part II, column (g), for that ac-
carried forward indefinitely and deduc- tivity. But if you are a general partner or
If you are treating items on your tax an S corporation shareholder reporting
return differently from the way the part- ted in a later year subject to the basis your share of a partnership or an S cor-
nership or S corporation reported them limit for that year. To figure your aggre- poration loss from a rental real estate ac-
on its return, you may have to file Form gated stock basis, you can generally use tivity and you meet all of the conditions
8082. Form 7203. For more details on the ba-
sis rules for S corporations, see the In- listed earlier under Exception for Cer-
Special Rules That Limit Losses structions for Form 7203. tain Rental Real Estate Activities, you
do not have to complete Form 8582. In-
If you are claiming a deduction for
If you report a loss from a partnership or your share of an aggregate loss (or you stead, enter your (loss) in Part II, col-
S corporation, your loss may be reduced umn (g).

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