Form 8582 - Passive Activity Loss Limitations

Form 8582 is used by noncorporate taxpayers to figure their passive activity loss for the current tax year. Passive activity losses are generally losses from activities in which the taxpayer does not materially participate. The passive activity loss rules prevent taxpayers from using passive losses to offset earned or ordinary income. Passive losses can only be used to offset passive income.

To be considered materially participating in an activity, the taxpayer must be involved in the operation of the trade or business activity on a regular, continuous, and substantial basis.