Purpose of Form

Personal service corporations and closely held corporations use Form 8810 to figure the amount of any passive activity loss (PAL) or credit for the current tax year and the amount of losses and credits from passive activities allowed on the corporation's tax return. Form 8810 is also used to make the election to increase the basis of credit property when the corporation disposes of its interest in an activity for which it has an unused credit.

Generally, passive activities include trade or business activities in which the corporation did not materially participate for the tax year, and rental activities regardless of its participation.

Note. Individuals subject to the passive activity rules use Form 8582, Passive Activity Loss Limitations.