8582-K: Kentucky Passive Activity Loss Limitations (2025)
Kentucky · Kentucky DOR · Used for tax years 2025
Kentucky Form 8582-K calculates passive activity loss limitations for 2025, including losses from rental real estate with active participation and other passive activities. It accounts for current-year income and losses, prior-year unallowed losses, and the allocation of allowed
Who files this form
Form 8582-K calculates Kentucky passive activity loss limits when allowable Kentucky passive losses differ from allowable federal passive losses.
You must complete it using Kentucky income and losses if either:
- Federal Form 8582 is required and your Kentucky passive income or losses differ from your federal amounts.
- Your Kentucky prior-year unallowed (suspended) losses differ from your federal prior-year unallowed losses.
If Form 8582-K is not required, report adjustments for 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 or Federal Identification Number shown on it.
- Federal Form 8582, if required, and its 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.
- The forms or schedules and line numbers where each activity’s losses will be reported.
- Schedule M for the Kentucky passive income or loss adjustment.
If federal Form 8582 is not required, the worksheet uses passive losses and passive income included in federal adjusted gross income.
How to file
Enclose Form 8582-K with Kentucky Form 740, 740-NP or 741.
Use the federal Form 8582 instructions and Kentucky amounts to complete the applicable parts. Complete Parts IV and V before Part I.
Complete the Passive Activities Adjustment Worksheet to calculate the adjustment for Schedule M. A positive amount on worksheet line E is an Other Addition. A negative amount is an Other Subtraction.
The supplied text does not give a mailing address or e-filing instructions.
Common mistakes
- Starting Part I too soon: Complete Parts IV and V first.
- Using federal amounts for Kentucky entries: Complete Form 8582-K using Kentucky amounts and the federal Form 8582 instructions.
- Adding other passive activity adjustments to Schedule M: If 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 calculate the adjustment.
- Completing 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.
- Recomputing a joint federal Form 8582 separately: When filing a separate/combined Kentucky return after filing jointly federally, do not recompute the joint federal Form 8582 on a separate basis to compare with the Kentucky forms.
Questions people ask
What if line 3 shows net income or zero?
All losses are allowed, including prior-year unallowed losses entered on line 1(c) or 2(c). The form directs you not to complete Form 8582-K and to report the losses on the forms and schedules normally used.
What does line 11 show?
Line 11 shows total losses allowed from all passive activities for 2025. It is the sum of lines 9 and 10.
What if we file jointly federally but use a separate/combined Kentucky return?
Complete separate Kentucky Forms 8582-K, worksheets and schedules for each spouse. Allocate 50% of a jointly owned activity’s total income or loss to each spouse, along with that spouse’s separately owned income or losses. Identify each item on the federal schedules as T for taxpayer, S for spouse or J for jointly owned.
How do I complete the worksheet if federal Form 8582 is not required?
On worksheet line B, enter passive losses included in federal adjusted gross income as a positive amount. On line D, enter passive income included in federal adjusted gross income as a negative amount.