Understanding Form 8582: Passive Activity Loss Limits for Publicly Traded Partnerships

:memo:Passive activity loss limits are applied separately to each publicly traded partnership (PTP) investment, preventing netting with other non-PTP income.

:balance_scale:PTP investments must be tracked and reported separately on Form 8582, using the provided substitute worksheets.

:heavy_dollar_sign:Overall gains in PTP investments are reported as non-passive income, while losses can be used to offset passive income from the same PTP.

:calendar:PTP investments are subject to yearly tracking and reporting, with losses carrying forward if not sold during the year.

:bar_chart:Segregating PTP investments allows for accurate reporting and utilization of passive losses and gains.

Can I net losses from PTP investments with other non-PTP income?

—No, passive activity loss limits are applied separately to each PTP investment, preventing netting with other non-PTP income.

How do I report PTP investments on my tax return?

—PTP investments must be separately tracked and reported on Form 8582, using the provided substitute worksheets.

How are gains and losses treated in PTP investments?

—Overall gains in PTP investments are reported as non-passive income, while losses can be used to offset passive income from the same PTP.

What happens if I sell a PTP investment?

—When a PTP investment is sold, any remaining passive losses can be utilized, subject to at-risk basis limitations.

Do PTP investments require yearly tracking and reporting?

—Yes, PTP investments must be tracked and reported on a yearly basis, with losses carrying forward if not sold during the year.

00:01This video explores Form 8582 and passive activity loss limits for taxpayers with investments in publicly traded partnerships (PTPs) and other passive activities.

02:50PTP investments are subject to passive activity loss limits applied separately to each investment, preventing netting with other non-PTP income.

06:13PTP investments must be tracked and reported separately on Form 8582, using the provided substitute worksheets.

08:40Overall gains in PTP investments are reported as non-passive income, while losses can be used to offset passive income from the same PTP.

09:25PTP investments require yearly tracking and reporting, with losses carrying forward if not sold during the year.