2004 Instructions for Form 1040 (ALL) - Supreme Law Firm
2004 Instructions for Form 1040 (ALL) - Supreme Law Firm
2004 Instructions for Form 1040 (ALL) - Supreme Law Firm
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If your rental real estate loss is not from Partners and S corporation shareholders 2. You owned at least a 10% direct or<br />
a passive activity or you meet the exception should get a separate statement of income, indirect interest in a <strong>for</strong>eign partnership<br />
<strong>for</strong> certain rental real estate activities (exactivity<br />
engaged in by the partnership and S ship.<br />
expenses, deductions, and credits <strong>for</strong> each while U.S. persons controlled that partner-<br />
plained on page E-2), you do not have to<br />
complete <strong>Form</strong> 8582. Enter the loss from corporation. If you are subject to the at-risk 3. You had an acquisition, disposition,<br />
line 22 on line 23.<br />
rules <strong>for</strong> any activity, use <strong>Form</strong> 6198 to or change in proportional interest of a <strong>for</strong>-<br />
figure the amount of any deductible loss. If eign partnership that:<br />
the activity is nonpassive, enter any deducta.<br />
Increased your direct interest to at<br />
ible loss from <strong>Form</strong> 6198 on the approprileast<br />
10% or reduced your direct interest of<br />
ate line in Part II, column (h), of Schedule<br />
Parts II and III<br />
E.<br />
at least 10% to less than 10%, or<br />
• If you have a passive activity loss, you b. Changed your direct interest by at<br />
If you need more space in Part II or III to<br />
generally need to complete <strong>Form</strong> 8582 to least a 10% interest.<br />
list your income or losses, attach a continuation<br />
sheet using the same <strong>for</strong>mat as shown<br />
figure the amount of the allowable loss to 4. You contributed property to a <strong>for</strong>eign<br />
in Part II or III. However, be sure to cominterest<br />
if:<br />
enter in Part II, column (f), <strong>for</strong> that activity. partnership in exchange <strong>for</strong> a partnership<br />
But if you are a general partner or an S<br />
plete the “Totals” columns <strong>for</strong> lines 29a<br />
corporation shareholder reporting your<br />
and 29b, or lines 34a and 34b, as appropri-<br />
a. Immediately after the contribution,<br />
share of a partnership or an S corporation<br />
ate. If you also completed Part I on more<br />
you owned, directly or indirectly, at least a<br />
loss from a rental real estate activity and<br />
than one Schedule E, use the same Sched-<br />
10% interest in the partnership, or<br />
you meet all three of the conditions listed<br />
ule E on which you entered the combined on page E-2 under Exception <strong>for</strong> Certain b. The fair market value of the property<br />
totals in Part I.<br />
Rental Real Estate Activities, you do not you contributed to the partnership in exhave<br />
to complete <strong>Form</strong> 8582. Instead, enter change <strong>for</strong> a partnership interest, when ad-<br />
Tax preference items. If you are a partner,<br />
your allowable loss in Part II, column (f). ded to other contributions of property you<br />
a shareholder in an S corporation, or a ben-<br />
made to the partnership during the precedeficiary<br />
of an estate or trust, you must take If you have passive activity income, ing 12-month period, exceeds $100,000.<br />
into account your share of preferences and complete Part II, column (g), <strong>for</strong> that activ-<br />
adjustments from these entities <strong>for</strong> the alreport<br />
certain dispositions by a <strong>for</strong>eign<br />
ity.<br />
Also, you may have to file <strong>Form</strong> 8865 to<br />
ternative minimum tax on <strong>Form</strong> 6251 or If you have nonpassive income or<br />
Schedule I of <strong>Form</strong> 1041.<br />
losses, complete Part II, columns (h) partnership of property you previously con-<br />
through (j), as appropriate.<br />
tributed to that partnership if you were a<br />
partner at the time of the disposition.<br />
Partnerships<br />
For more details, including penalties <strong>for</strong><br />
See the Schedule K-1 instructions be<strong>for</strong>e failing to file <strong>Form</strong> 8865, see <strong>Form</strong> 8865<br />
Part II entering on your return other partnership and its separate instructions.<br />
Income or Loss From<br />
items from a passive activity or income or<br />
loss from any publicly traded partnership. S Corporations<br />
Partnerships and S<br />
You can deduct unreimbursed ordinary If you are a shareholder in an S corporation,<br />
Corporations<br />
and necessary expenses you paid on behalf your share of the corporation’s aggregate<br />
If you are a member of a partnership or of the partnership if you were required to losses and deductions (combined income,<br />
joint venture or a shareholder in an S corpojusted<br />
basis of your corporate stock and any<br />
pay these expenses under the partnership losses, and deductions) is limited to the ad-<br />
ration, use Part II to report your share of the agreement. See the instructions <strong>for</strong> line 27<br />
partnership or S corporation income (even on page E-6 <strong>for</strong> how to report these ex-<br />
debt the corporation owes you. Any loss or<br />
if not received) or loss.<br />
penses.<br />
deduction not allowed this year because of<br />
Report allowable interest expense paid<br />
the basis limitation can be carried <strong>for</strong>ward<br />
You should receive a Schedule K-1<br />
or incurred from debt-financed acquisitions<br />
and deducted in a later year subject to the<br />
from the partnership or S corporation. You<br />
in Part II or on Schedule A depending on<br />
basis limitation <strong>for</strong> that year.<br />
should also receive a copy of the Partner’s<br />
or Shareholder’s <strong>Instructions</strong> <strong>for</strong> Schedule the type of expenditure to which the inter-<br />
If you are claiming a deduction <strong>for</strong> your<br />
K-1. Your copy of Schedule K-1 and its est is allocated. See Pub. 535 <strong>for</strong> details. share of an aggregate loss, attach to your<br />
instructions will tell you where on your If you claimed a credit <strong>for</strong> federal tax on<br />
return a computation of the adjusted basis<br />
return to report your share of the items. If gasoline or other fuels on your 2003 <strong>Form</strong><br />
of your corporate stock and of any debt the<br />
you did not receive these instructions with <strong>1040</strong> based on in<strong>for</strong>mation received from<br />
corporation owes you. See the Schedule<br />
your Schedule K-1, see page 7 of the <strong>Form</strong> the partnership, enter as income in column<br />
K-1 instructions <strong>for</strong> details.<br />
<strong>1040</strong> instructions <strong>for</strong> how to get a copy. Do (g) or column (j), whichever applies, the After applying the basis limitation, the<br />
not attach Schedules K-1 to your return. amount of the credit claimed <strong>for</strong> 2003. deductible amount of your aggregate losses<br />
Keep them <strong>for</strong> your records.<br />
Part or all of your share of partnership<br />
and deductions may be further reduced by<br />
If you are treating items on your tax income or loss from the operation of the<br />
the at-risk rules and the passive activity<br />
return differently from the way the partner- business may be considered net earnings<br />
loss rules. See page E-1.<br />
ship (other than an electing large partner- from self-employment that must be reship)<br />
or S corporation reported them on its ported on Schedule SE. Enter the amount earnings and profits of S corporations are<br />
Distributions of prior year accumulated<br />
return, you may have to file <strong>Form</strong> 8082. If from Schedule K-1 (<strong>Form</strong> 1065), box 14, dividends and are reported on <strong>Form</strong> <strong>1040</strong>,<br />
you are a partner in an electing large part- code A (or from Schedule K-1 (<strong>Form</strong> line 9a.<br />
nership, you must report the items shown 1065-B), box 9 (code K1)), on Schedule Interest expense relating to the acquision<br />
Schedule K-1 (<strong>Form</strong> 1065-B) on your SE, after you reduce this amount by any tion of shares in an S corporation may be<br />
tax return the same way that the partnership allowable expenses attributable to that in- fully deductible on Schedule E. For details,<br />
reported the items on Schedule K-1. come. see Pub. 535.<br />
Special rules that limit losses. Please note Foreign partnerships. If you are a U.S. Your share of the net income of an S<br />
the following. person, you may have to file <strong>Form</strong> 8865 if corporation is not subject to self-employany<br />
of the following applies.<br />
ment tax.<br />
• If you have a current year loss, or a<br />
prior year unallowed loss, from a partner-<br />
1. You controlled a <strong>for</strong>eign partnership<br />
ship or an S corporation, see At-Risk Rules<br />
(that is, you owned more than a 50% direct<br />
and Passive Activity Loss Rules on page<br />
or indirect interest in the partnership).<br />
E-1.<br />
E-5