IRS Form 8582 is completed by noncorporate taxpayers to report their passive activity income and losses. Passive activity losses can generally only be offset against other passive activity income.

Special rules apply to investments in publicly traded partnerships (PTP) where the taxpayer receives a Schedule K1. Under IRC Section 469, the passive activity loss (PAL) rules apply separately to each PTP investment. The Form 8582 does NOT report activities from PTP investments. The PTP income & loss must be separately tracked on a proforma Form 8582 for each PTP investment.

In this example, we have a taxpayer with three Schedule K1s from passive activities. Two are from PTP investments, and the third investment is in a nonPTP partnership where the taxpayer does not materially participate.

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Form 8995 for PTP Income:    • IRS Form 8995 with Publicly Traded Pa...  

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