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Question

My client disposed of a passive activity this year, but the sale does not appear on Form 8582. Why?

Answer

The reporting requirements for total dispositions of passive activities are discussed in the instructions for Form 8582. They are explained in the section entitled "Reporting an Entire Disposition on Schedule D or Form 4797." According to the instructions, the following situations are not required to be reported on Form 8582 or the worksheets.

• The activity was disposed of at an overall loss.
• The activity was disposed with an overall gain, and was the only passive or former passive activity.

The application reports the overall gain on disposal from only one passive activity on the 8582 but does not print the 8582. There are no effects on income, loss, or the tax calculation.

Related topic: Passive loss information FAQs (1040)

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