8582-K: Kentucky Passive Activity Loss Limitations (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
Kentucky Form 8582-K calculates passive activity loss limitations for 2024, including the special allowance for rental real estate with active participation. It records current-year income and losses, prior-year unallowed losses, and the allocation of allowed and unallowed losses
Who files this form
Form 8582-K is used when allowable Kentucky passive losses differ from allowable federal passive losses.
Complete it using Kentucky income and losses if either condition applies:
- Federal Form 8582 is required, and Kentucky passive income or losses differ from federal passive income or losses.
- Kentucky prior-year unallowed (suspended) losses differ from federal prior-year unallowed losses.
If Form 8582-K is not required, report differences between Kentucky and federal passive income or losses on the appropriate lines of Schedule M.
What you'll need
Have these forms and details available:
- Your Kentucky return, Form 740, 740-NP or 741, including the name and Social Security number or federal identification number shown on it.
- Federal Form 8582, if required, and its federal instructions.
- Each passive activity’s name, current-year Kentucky net income or loss, and prior-year Kentucky unallowed losses.
- Federal allowable passive losses and passive income for the Passive Activities Adjustment Worksheet. If federal Form 8582 is not required, use passive losses and income included in federal adjusted gross income.
- Schedule M for reporting the passive activity adjustment.
If completing Part II, you also need modified adjusted gross income as described in the federal instructions.
How to file
Enclose Form 8582-K with Kentucky Form 740, 740-NP or 741. The supplied text does not give a mailing address or e-filing directions.
To prepare the form:
- Use the federal Form 8582 instructions and Kentucky amounts for all entries.
- Complete Parts IV and V before Part I, then follow the form’s directions for the remaining parts.
- Complete the Passive Activities Adjustment Worksheet to calculate the Schedule M adjustment. A positive amount on worksheet line E is an Other Addition; a negative amount is an Other Subtraction.
Common mistakes
- Starting with Part I: The form cautions you to complete Parts IV and V first.
- Using Part II when it is not allowed: If you are married filing separately and lived with your spouse at any time during the year, skip Part II and go to line 10.
- Adding other passive-activity adjustments to Schedule M: When Form 8582-K is required, do not include other passive-activity adjustments to federal adjusted gross income on Schedule M. Use the Passive Activities Adjustment Worksheet to determine the adjustment.
- Treating a joint federal return as separate federal returns: When filing a separate/combined Kentucky return with a joint federal return, prepare separate Kentucky Forms 8582-K, worksheets and schedules for each spouse. Do not recompute the joint federal Form 8582 separately.
- Overlooking ownership labels: For that separate/combined Kentucky filing situation, identify each item on federal schedules as T for taxpayer, S for spouse or J for jointly owned. Allocate 50% of jointly owned activity income or loss to each spouse.
Questions people ask
What if Part I, line 3 is net income or zero?
All losses are allowed, including prior-year unallowed losses entered on lines 1(c) and 2(c). The form says not to complete Form 8582-K and to report the losses on the forms and schedules normally used.
Where do I find the rules for active participation in rental real estate?
The form directs you to “Active Participation in a Rental Real Estate Activity” in the federal Form 8582 instructions.
What limits are printed for the 2024 rental real estate special allowance calculation?
Part II, line 5 uses $150,000, or $75,000 if married filing separately or separate on a combined return. If modified adjusted gross income on line 6 is at least that amount, enter zero on line 9. Line 8 is limited to $25,000, or $12,500 if filing separately or separate on a combined return. Line 9 is the smaller of line 4 or line 8.
Can I complete the adjustment worksheet without a federal Form 8582?
Yes. If federal Form 8582 is not required, worksheet line B uses passive losses included in federal adjusted gross income, and line D uses passive income included in federal adjusted gross income. Enter line B as positive and line D as negative.