Part I—Passive Activity Credits

Use Part I to combine your credits from passive activities to determine if you have a PAC for the current year.

If your credits from all passive activities exceed the tax attributable to net passive income, you have a PAC for the current year. Generally, you have net passive income if line 3 of Form 8582 shows income. For more information, see the instructions for Form 8582-CR, line 6.

Lines 1a through 1c. Individuals and qualifying estates that actively participated in rental real estate activities

6 Instructions for Form 8582-CR (Rev. 12-2025)

must include the credits (other than rehabilitation credits or low-income housing credits) from these activities on lines 1a through 1c. Use Worksheet 1 to figure the amounts to enter on lines 1a and 1b.

See Part II—Special Allowance for Rental Real Estate Activities With Active Participation , later.

Caution: If you are married filing a separate return and lived with your spouse at any time during the year, even if you actively participated in the rental real estate activity, include the credits in Worksheet 4, not in Worksheet 1.

Note: You may take credits that arose in a prior tax year (other than low-income housing and rehabilitation credits) under the special allowance only if you actively participated in the rental real estate activity for both that prior year and this year. If you didn’t actively participate for both years, include the credits in Worksheet 4, not in Worksheet 1.

Lines 2a through 2c. Individuals (including limited partners) and qualifying estates who had rehabilitation credits from rental real estate activities or low-income housing credits for property placed in service before 1990 must include the credits from those activities on lines 2a through 2c. Use Worksheet 2 to figure the amounts to enter on lines 2a and 2b.

If you have low-income housing credits for property placed in service after 1989, include those credits in Worksheet 3 instead of Worksheet 2. If you held an indirect interest in the property through a partnership, S corporation, or other pass-through entity, use Worksheet 3 only if you also acquired your interest in the pass-through entity after 1989.

Lines 3a through 3c. Individuals (including limited partners) and qualifying estates who had low-income housing credits from rental real estate activities for property placed in service after 1989 must include those credits on lines 3a through 3c. If you held an indirect interest in the property through a partnership, S corporation, or other pass-through entity, use lines 3a through 3c only if you also acquired your interest in the pass-through entity after 1989. Use Worksheet 3 to figure the amounts to enter on lines 3a and 3b.

Caution: Include the credits in Worksheet 4, but not in Worksheet 2 or 3, if you are married filing a separate

return and lived with your spouse at any time during the year.

Lines 4a through 4c. Individuals must include on lines 4a through 4c credits from passive activities that weren’t entered on Worksheets 1, 2, or 3. Trusts must include credits from all passive activities in Worksheet 4. Use Worksheet 4 to figure the amounts to enter on lines 4a and 4b.

Line 6. If Form 8582, line 3, shows net income or you didn’t complete Form 8582 because you had net passive income, you must figure the tax on the net passive income. If you have an overall loss on an entire disposition of your interest in a passive activity, reduce net passive income, if any, on Form 8582, line 3, to the extent of the loss (but not below zero) and use only the remaining net passive income in the computation below. If you had a net passive activity loss, enter -0- on line 6 and go to line 7.

Figure the tax on net passive income as follows.

A. Taxable income including net

passive income . . . . . . . . . .

B. Tax on line A* . . . . . . . . . . . . . . . . . . . . .

C. Taxable income without net passive

income . . . . . . . . . . . . . . .

D. Tax on line C* . . . . . . . . . . . . . . . . . . . . . .

E. Subtract line D from line B and enter the result on

Form 8582-CR, line 6 . . . . . . . . . . . . . . . . .

• For Form 1040 or 1040-SR, use the Tax Table, Tax Computation Worksheet, or other appropriate method you used to figure your tax. For Form 1041, use the Tax Rate Schedule, Qualified Dividends Tax Worksheet, or Schedule D, whichever applies.

Note: When using taxable income in the above computation, it isn’t necessary to refigure items that are based on a percentage of adjusted gross income.

Line 7. If line 7 is zero because the tax on the net passive income on line 6 is greater than your credits from passive activities on line 5, all your credits from passive activities are allowed. In this case, enter the amount from line 5 on line 37 and report the credits on the forms normally used. Don’t complete Worksheets 5 through 9.

Instructions for Form 8582-CR (Rev. 12-2025) 7

Worksheet 1 for Lines 1a and 1b (Keep for your records.)

Lines 1a and 1b. Use Worksheet 1 to figure the amounts to enter on lines 1a and 1b. Use line 1a for credits from rental real estate activities with active participation for the current year and line 1b for prior year unallowed credits from rental real estate activities with active participation in both the prior year in which the credit arose and the current year. See Special Allowance for Rental Real Estate Activities, earlier, for a definition of active participation.

For credits from Form 3800, enter the source form (for example, Form 3468 or Form 6765) and “Form 3800, line” followed by the appropriate line number (2, 23, or 32) in the “From Form” column.

After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and then complete line 1c.

Worksheet 2 for Lines 2a and 2b (Keep for your records.)

Lines 2a and 2b. Use Worksheet 2 to figure the amounts to enter on lines 2a and 2b. Use line 2a for rehabilitation credits and low-income housing credits from rental real estate activities for the current year and line 2b for prior year unallowed credits from those activities. However, use Worksheet 3 instead of Worksheet 2 for low-income housing credits for property placed in service after 1989. If you held an indirect interest in the property through a partnership, S corporation, or other pass-through entity, use Worksheet 3 only if you also acquired your interest in the pass-through entity after 1989. Use this worksheet if you don’t meet both requirements.

Enter the source form (Form 3468 or Form 8586) and “Form 3800, line” followed by the appropriate line number (2, 23, or 32) in the “From Form” column.

After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and then complete line 2c.

Worksheet 3 for Lines 3a and 3b (Keep for your records.)

Lines 3a and 3b. Use Worksheet 3 to figure the amounts to enter on lines 3a and 3b for low-income housing credits for property placed in service after 1989. If you held an indirect interest in the property through a partnership, S corporation, or other pass-through entity, use Worksheet 3 only if you also acquired your interest in the pass-through entity after 1989. Use line 3a for the current year credits and line 3b for prior year unallowed credits for those activities.

Enter “Form 3800, line” followed by the appropriate line number (2, 23, or 32) in the “From Form” column.

After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and then complete line 3c.

8 Instructions for Form 8582-CR (Rev. 12-2025)

Worksheet 4 for Lines 4a and 4b (Keep for your records.)

Lines 4a and 4b. Use Worksheet 4 to figure the amounts to enter on lines 4a and 4b. Use line 4a for all other passive activity credits for the current year and line 4b for prior year unallowed credits from those activities.

For credits from Form 3800, enter the source form (for example, Form 3468 or Form 6765) and “Form 3800, line” followed by the appropriate line number (2, 23, or 32) in the “From Form” column.

After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and then complete line 4c.