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Passive Activity Loss ATG - Exhibit 5.1: Dispositions

Publication Date - December, 2004

NOTE: This guide is current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of this document, no guarantees are made concerning the technical accuracy after the publication date.


Table of Contents / Exhibit 5.2
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Exhibit 5.1: Dispositions
IRC 469(g)

Computation

Net gain/loss on disposition of property __________

Net income/loss from current year (+/-) __________

Prior year suspended losses  (+/-)           __________

Overall net income/loss on disposition   __________

Decision Tree

Overall Gain:  If there is an overall net gain, all income, including gain on sale of property generally goes on Form 8582, as do the current and suspended losses.  All income and losses are also reported on the appropriate schedules, typically Schedule E and Form 4797.  Losses are fully deductible.

Overall Loss:  If there is an overall net loss, none of the losses go on Form 8582, but are reported on the appropriate schedules, if answer to all the following is yes: 

  • Is there an entire disposition of the activity?
  • Is all gain or loss realized and recognized?
  • Is sale or other disposition to an unrelated party?

If the answer to any of the above is no, income and losses from the activity are reflected on Form 8582.  Losses are deductible only to the extent of passive income.


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