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Paperwork Reduction Act closely held corporation has a passive prior year unallowed losses from the
activity credit for the year if its credits activity.
Notice from passive activities (including prior Overall loss means the excess of the
We ask for the information on this form year unallowed credits) exceed the sum prior year unallowed losses from the
to carry out the Internal Revenue laws of of the tax attributable to net passive activity over the net income from the
the United States. You are required to income and the tax attributable to net activity or the prior year unallowed
give us the information. We need it to active income. losses from the activity plus the net loss
ensure that you are complying with Generally, passive activities include from the activity.
these laws and to allow us to figure and trade or business activities in which the Prior year unallowed losses means the
collect the right amount of tax. corporation did not materially participate deductions and losses from an activity
The time needed to complete and file for the tax year, and rental activities that were disallowed under the passive
this form will vary depending on regardless of its participation. activity loss limitations in a prior year
individual circumstances. The estimated For more information, get Pub. 925, and carried forward to this tax year
average time is: Passive Activity and At-Risk Rules. under section 469(b). See Regulations
Recordkeeping 26 hr., 19 min. section 1.469-1(f)(4).
Learning about the law Who Must File
or the form 5 hr., 22 min. Personal service corporations and Coordination With
Preparing and sending closely held corporations that have Other Limitations
the form to the IRS 6 hr., 2 min. losses or credits from passive activities Losses from passive activities generally
must file Form 8810. are subject to other applicable
If you have comments concerning the
accuracy of these time estimates or For the definition of a “personal limitations (e.g., basis and at-risk
suggestions for making this form service corporation,” see Temporary limitations) before they are subject to the
simpler, we would be happy to hear from Regulations section 1.441-4T(d) or the passive loss limitations. Once a loss
you. See the instructions for the tax instructions for item A on page 6 of the becomes allowable under these other
return with which this form is filed. Instructions for Forms 1120 and 1120-A. limitations, the corporation must
A corporation is a “closely held determine whether the loss is limited
corporation” if at any time during the under the passive loss rules. See Form
General Instructions last half of the tax year more than 50% 6198, At-Risk Limitations, for details on
in value of its outstanding stock is the at-risk rules. Capital losses that are
Purpose of Form owned, directly or indirectly, by or for allowable under the passive loss rules,
not more than five individuals, and the however, may be limited under section
Form 8810 is used by personal service
corporation is not an S corporation or a 1211(a). Similarly, percentage depletion
corporations and closely held
personal service corporation. Certain deductions that are allowable under the
corporations to figure the amount of any
organizations described in section passive loss rules may be limited under
passive activity loss or credit for the
542(a)(2) are treated as individuals for section 613A(d).
current tax year and the amount of
losses and credits from passive activities this purpose. For stock ownership rules,
allowed on the corporation’s tax return. see section 544 (as modified by section Special Rules for
465(a)(3)).
It is also used to make the election to Consolidated Group
increase the basis of credit property
Definitions The passive activity loss and passive
when the corporation disposes of its
activity credit of an affiliated group of
interest in an activity. Except as otherwise indicated, the corporations filing a consolidated return
A personal service corporation has a following terms are defined as shown for the tax year (a consolidated group)
passive activity loss for the year if the below. are determined by taking into account
total losses (including prior year Net income means the excess of the following items of each member of
unallowed losses) from its passive current year income over current year the group.
activities exceed the total income from deductions from the activity. This ● Passive activity gross income and
its passive activities. A closely held includes any current year gains or losses deductions.
corporation has a passive activity loss from the disposition of assets or an
for the year if the total losses (including ● Gain or loss on dispositions.
interest in the activity.
prior year unallowed losses) from all its ● Net active income (for a consolidated
Net loss means the excess of current group treated as a closely held
passive activities exceed the sum of the
year deductions over current year corporation).
total income from all its passive activities
income from the activity. This includes
and its net active income.
any current year gains or losses from the ● Credits from passive activities.
A personal service corporation has a disposition of assets or an interest in the
passive activity credit for the year if its activity. Activities That Are Not
credits from passive activities (including
prior year unallowed credits) exceed the
Overall gain means the excess of the Passive Activities
net income from the activity over the
tax attributable to net passive income. A The following are not passive activities:
Page 6
Specific Instructions Worksheet 1—Computation of Income, Gains, Deductions, and Losses
Note: Complete Worksheets 1 and 2 for Worksheet 2
before completing Part I of Form 8810. Name of activity: Name of activity:
Worksheet 2
Total income for the current year is shown on line 5 in Worksheet 1 and total deductions and losses for the current year are
shown on line 10 in Worksheet 1. The prior year unallowed losses can be found in the corporation’s Worksheet 4, column (c) of
the 1994 Form 8810 instructions. The totals from columns (a), (b), and (c) of Worksheet 2 are entered on lines 1a, 1b, and 1c of
Form 8810.
Combine income, deductions, and losses in columns (a) through (c) for each activity. Enter any overall gain in column (d) or
any overall loss in column (e). Columns (d) and (e) are not entered on Form 8810. These amounts will be used when Form 8810
is completed to figure the loss allowed for the current year.
Page 7
Part I—1995 Passive income. Net active income is the If the corporation disposed of its entire
corporation’s taxable income for the tax interest in a passive activity to an
Activity Loss year, determined without regard to the unrelated party in a fully taxable
Lines 1d and 3.—If line 1d or 3 shows following items: transaction, figure net active income by
net income or zero, all the deductions ● Net passive income or loss. taking into account an overall loss from
and losses are allowed including any that activity only to the extent it exceeds
● Portfolio income. See Passive Activity
prior year unallowed losses entered on overall gain from all other passive
Income on page 4.
line 1c. Enter the deductions on the activities (the gain, if any, shown on line
appropriate lines of Form 1120 and any ● Deductions attributable to portfolio 1d of Form 8810). If there is an overall
losses from Form 4797 or Schedule D income described in Temporary loss from all other passive activities (line
(Form 1120) on that form or schedule, if Regulations section 1.469-2T(d)(2)(i), (ii), 1d of Form 8810 is a loss), figure net
applicable, including any prior year and (iv). active income by taking into account all
unallowed losses that should go on ● Interest expense allocated under of the overall loss from that activity.
those forms. If the prior year unallowed Temporary Regulations section 1.163-8T Line 4.—Use Worksheet 3 below and
losses include deductions that would to a portfolio expenditure (within the Worksheet 4 on page 9 to figure the
have been reported on page 1 of Form meaning of Temporary Regulations unallowed deductions and losses to be
1120 instead of on Form 4797 or section 1.163-8T(b)(6)). carried forward and the allowed
Schedule D, include the prior year ● Gain on the disposition of substantially deductions and losses to report on the
unallowed losses on the appropriate line appreciated property formerly held for forms and schedules for 1995.
along with any current year deduction or investment. See Regulations section Worksheet 2, columns (d) and (e), will
loss from that line. 1.469-2(c)(2)(iii)(F). show whether an activity had an overall
Example. The corporation had $1,000 of ● Gross income from certain oil or gas gain or loss. If an activity has an overall
deductions for current year repairs and properties treated under Regulations gain in column (d) of Worksheet 2, report
maintenance and $500 of deductions for section 1.469-2(c)(6) as not from a all of the deductions and losses listed in
prior year unallowed repairs and passive activity. Worksheet 1 and any prior year
maintenance. Enter $1,500 as the ● Gross income and deductions from unallowed losses in Worksheet 2 for
deduction for repairs and maintenance any trade or business activity of trading those activities on the appropriate lines
allowed from passive activities on the certain personal property described in of Form 1120 and on Schedule D or
proper line. Temporary Regulations section Form 4797, if applicable.
Line 2—Closely held corporations.— 1.469-1T(e)(6), but only if the corporation Use Worksheets 3 and 4 for activities
Closely held corporations can offset the did not materially participate in the in Worksheet 2 that show an overall loss
loss, if any, on line 1d with net active activity for the tax year. in column (e).
Worksheet 3
If the corporation has activities in Worksheet 2 with an overall loss in column (e), use Worksheet 3 to figure the unallowed
deductions and losses for each activity.
If any of the activities in Worksheet 2 had an overall gain in column (d), all of the deductions and losses (including prior year
unallowed losses) for that activity are allowed in full. Enter the deductions on the appropriate line of Form 1120 and enter any
losses on Form 4797 or Schedule D, if applicable.
Note: If there were prior year unallowed losses from 1994, include the prior year unallowed losses on the appropriate line along
with any current year deduction or loss for that line. See the example in the instructions for lines 1d and 3 above. Prior year
unallowed losses from Form 4797 and Schedule D (Form 1120) should have been kept separate last year and should be
identified as “prior year unallowed passive activity losses” on Form 4797 and Schedule D (Form 1120).
Column (a).—Enter the loss from column (e) of Worksheet 2.
Column (b).—Divide each of the individual losses in column (a) by the total of all the losses in column (a) and enter the ratio for
each of the activities in column (b). The total of all the ratios should equal 1.00.
Column (c).—Multiply the unallowed loss from line 3 of Form 8810 by each of the ratios in column (b) and enter the results in
column (c).
Use Worksheet 4 to figure the allowed deductions and losses.
Name of activity (a) Loss from (b) Ratio (c) Unallowed deductions
Worksheet 2 col. (e) and losses
Totals © 1.00
Page 8
Worksheet 4 Line 3, column (a).—Enter any Form total Form 1120 deductions by each of
4797 losses from line 9 of Worksheet 1 the ratios in column (b). Enter the
Use Worksheet 4 to allocate the plus any prior year unallowed Form 4797 portion of the unallowed loss in
unallowed deductions and losses for losses for that activity. Worksheet 3, column (c) that is
each activity among Form 1120 attributable to a Schedule D or Form
deductions and any losses to be Line 1, column (b).—Divide each of the
individual Form 1120 deductions shown 4797 loss in column (c) of this
reported on Form 4797 and Schedule D. worksheet.
in column (a) by the total of all of the
If the unallowed loss is reported on Form 1120 deductions in column (a) and Column (d).—Subtract column (c) from
one form or schedule, skip the following enter the ratio for each of the column (a) and enter the results in this
example and complete Worksheet 4. deductions in column (b). The total of column. Enter the deductions allowed
If the unallowed loss is from losses the ratios must equal 1.00. for Form 1120 on the proper lines of
reported on more than one form or Column (c).—Allocate the portion of the Form 1120 and enter the allowed
schedule, allocate the unallowed loss loss in Worksheet 3, column (c), among Schedule D and Form 4797 losses on
from column (c) of Worksheet 3 among the Form 1120 deductions by multiplying that form or schedule.
the net losses as follows: the unallowed loss attributable to the
Example. The corporation has one
passive activity. The activity has an
unallowed loss of $18,000 in column (c)
of Worksheet 3 and the following net
losses and net gain: Worksheet 4—Allowed Deductions and Losses
Form 1120
Gross receipts $100,000 Name of activity: (b) Ratio (c) Unallowed (d) Allowed
(a) Deductions deductions and deductions and
Deductions 120,000 and losses losses losses
Net loss ($20,000)
1. Form 1120 deductions:
Schedule D Form 4797
Gain $1,000 Gain $5,000 a. Cost of goods sold
Loss (2,000) Loss (2,000) b. Compensation of officers
Net loss ($1,000) Net gain $3,000
c. Salaries and wages
Add the net losses of $20,000 and
d. Repairs and maintenance
$1,000, for a total of $21,000. Divide the
net loss reported on each form by the e. Bad debts
total of the net losses, and multiply the f. Rents
result by the unallowed loss of $18,000, g. Taxes and licenses
as shown below: h. Interest
$20,000
Form 1120: 3 $18,000 = $17,143 i. Depreciation
$21,000
j. Depletion
$1,000
Schedule D: 3 $18,000 = $857 k. Advertising
$21,000
l. Other deductions
On Form 4797, report the $2,000 loss
Total Form 1120 deductions © 1.00
and the $5,000 gain. On Worksheet 4,
enter the $17,143 of unallowed 2. Schedule D losses
deductions allocated to Form 1120 in 3. Form 4797 losses
column (c) on the line for total Form Name of activity: (b) Ratio (c) Unallowed (d) Allowed
(a) Deductions deductions and deductions and
1120 deductions. Enter the $857 of and losses losses losses
unallowed Schedule D losses in column
(c) of line 2. Worksheet 4 is used to 1. Form 1120 deductions:
allocate the $17,143 to the Form 1120 a. Cost of goods sold
deductions and show the allowed and b. Compensation of officers
unallowed Schedule D loss.
c. Salaries and wages
Line 1, column (a).—Enter the current
year deductions for each Form 1120 d. Repairs and maintenance
expense (lines 6a through 6l of e. Bad debts
Worksheet 1) plus any prior year f. Rents
unallowed Form 1120 deduction for that g. Taxes and licenses
activity. For example, if line 6i of
Worksheet 1 shows current year h. Interest
depreciation for the activity of $2,200, i. Depreciation
and the activity had prior year unallowed j. Depletion
depreciation of $1,200, enter $3,400 on k. Advertising
line 1i, column (a), of Worksheet 4.
l. Other deductions
Line 2, column (a).—Enter any © 1.00
Total Form 1120 deductions
Schedule D losses from line 8 of
Worksheet 1 plus any prior year 2. Schedule D losses
unallowed Schedule D losses for that 3. Form 4797 losses
activity.
Page 9
Publicly Traded Partnerships through each PTP that the corporation ● Nonconventional source fuel credit.
owned an interest in during the tax year:
(PTPs)
1. Combine any current year income, Worksheet 5
A publicly traded partnership (PTP) is a gains, deductions, and losses, and prior
partnership whose interests are traded Use Worksheet 5 on page 11 to figure
year unallowed losses to see if there is
on an established securities market or the amounts to enter on line 5a and 5b
an overall gain or loss. Include only the
are readily tradable on a secondary of Form 8810.
same types of income and losses that
market (or its substantial equivalent). would be included in figuring net income Column (a).—Convert any current year
An established securities market or loss from a non-PTP passive activity qualified expenditures into credits before
includes any national securities (see Passive Activity Income and beginning Worksheet 5. Use the
exchange and any local exchange Deductions on page 4). following forms:
registered under the Securities 2. If there is an overall gain, the net Form 3800, General Business Credit.—
Exchange Act of 1934 or exempted from gain portion (total income in excess of Enter the credits from line 2 of Form
registration because of the limited total deductions and losses) is 3800 in column (a) of Worksheet 5. If the
volume of transactions. It also includes nonpassive income. Report the income, credits are from more than one activity
any over-the-counter market. deductions, and losses on the forms or more than one type of credit,
A secondary market generally exists and schedules normally used. separate the credits by activity or type
where a person stands ready to make a before making entries in the worksheet.
3. If there is an overall loss (other than
market in the interest. An interest is For example, the corporation has a jobs
in a year in which the corporation
treated as readily tradable if the interest credit from one passive activity and a
disposed of its entire interest in the
is regularly quoted by persons, such as research credit from a different passive
PTP), the deductions and losses are
brokers or dealers, who are making a activity. Enter the jobs credit and the
allowed to the extent of the income, and
market in the interest. research credit on separate lines in
the excess deductions and losses are
column (a) of Worksheet 5.
The substantial equivalent of a carried forward for use in a future year
secondary market exists where there is when there is income to offset them. Form 5735, Possessions Corporation
no identifiable market maker, but the Report the income and the loss allowed Tax Credit Allowed Under Section
holder of an interest has a readily to the extent of income on the form or 936.—Enter the portion of the credit
available, regular, and ongoing schedule normally used. attributable to passive activities from line
opportunity to sell or exchange an 17 or line 27 of Form 5735 in column (a)
interest through a public means of of Worksheet 5.
Part II—1995 Passive
obtaining or providing information of Form 8586, Low-Income Housing
offers to buy, sell, or exchange interests. Activity Credits Credit.—If the corporation is not
Similarly, the substantial equivalent of a Use Part II of Form 8810 to figure the required to file Form 3800, enter the
secondary market exists where the amount of credits allowed from passive portion of the credit attributable to
prospective buyers and sellers have the activities for the current year and the passive activities from line 6 of Form
opportunity to buy, sell, or exchange amount that is unallowed and carried 8586 in column (a) of Worksheet 5.
interests in a timeframe and with the forward. Form 8834, Qualified Electric Vehicle
regularity and continuity that the The following credits from passive Credit.—Enter the credits from line 10 of
existence of a market maker would activities are included on Form 8810: Form 8834 in column (a) of Worksheet 5.
provide. If the credits are from more than one
● Investment credit (including the
rehabilitation credit, energy credit, and activity, separate the credits by activity
Special Instructions for PTPs before making entries in the worksheet.
reforestation credit);
Section 469(k) provides that the passive Form 8844, Empowerment Zone
activity limitations must be applied ● Jobs credit;
Employment Credit.—Enter the credits
separately to items from each PTP. ● Credit for alcohol used as fuel; from line 5 in column (a) of Worksheet 5.
Losses from passive activities the ● Credit for increasing research If the credits are from more than one
corporation holds through a PTP activities; activity, separate the credits by activity
generally can be used only to offset ● Low-income housing credit; before making entries in the worksheet.
income or gain from passive activities of ● Enhanced oil recovery credit; Nonconventional source fuel credit.—
the same PTP. Any unallowed loss from Figure the credit from passive activities
● Disabled access credit;
a PTP passive activity is carried forward for fuel produced from a
and allowed in a tax year when the ● Renewable electricity production
nonconventional source and enter the
corporation has passive income from the credit;
credit in column (a) of Worksheet 5. See
same PTP or when the corporation ● Empowerment zone employment section 29 for more information on the
disposes of its entire interest in that PTP. credit; credit for fuel produced from a
Income from passive activities the ● Indian employment credit; nonconventional source.
corporation holds through a PTP cannot ● Credit for employer social security and Column (b).—In figuring this year’s
be used to offset losses from passive Medicare taxes paid on certain passive activity credit, the corporation
activities the corporation holds through employee tips; must take into account any credits from
another PTP or losses from any other ● Credit for contributions to selected passive activities disallowed for prior
passive activities. community development corporations; years and carried forward to this year.
Passive activity loss rules for partners ● Trans-Alaska pipeline liability fund Enter in column (b) of Worksheet 5 the
in PTPs.—Do not include any income, credit; prior year unallowed credits from column
gains, deductions, or losses from PTP (c) of Worksheet 6 in the 1994 Form
passive activities on Form 8810. Instead, ● Possessions corporation tax credit; 8810 instructions.
use the following rules to figure and ● Qualified electric vehicle credit; and
report income, gains, deductions, and
losses from passive activities held
Page 10
Worksheet 5—For Form 8810, Lines 5a and 5b
Line 7.—If any of the following apply, necessary to refigure items based on M. Tax attributable to line L
enter zero on line 7 and do not complete taxable income, such as the N. Subtract line M from line G. If zero or
less, enter -0- here and on line P
Part I or Part II of the computation on contributions deduction, dividends-
O. Enter the corporation’s nonpassive
this page. received deduction, and the net credits without regard to the tax
● The corporation is a personal service operating loss deduction. liability limitations
corporation with a loss or zero on line Use the applicable tax rates in section P. Tax attributable to net active income.
1d of Form 8810. 11 when figuring the tax attributable Subtract line O from line N
Q. Tax attributable to net passive
● The corporation is a personal service amounts. Also, see how to figure tax in income and net active income. Add
corporation with net passive income on the instructions for the tax return filed. lines F and P. Enter the result here and
line 1d of Form 8810 and the on line 7 of Form 8810
corporation has an overall loss from the
Computation for Line 7
Line C.—Enter the net income, if any,
entire disposition of a passive activity Part I—Tax Attributable to Net Passive from line 1d of Form 8810. If the
that is equal to or greater than the net Income corporation has an overall loss from the
income on line 1d. A. Income tax before credits from Form entire disposition of a passive activity,
● The corporation is a closely held 1120 (Schedule J, line 3) the amount to enter on line C is the net
corporation with a loss or zero on line B. Taxable income from Form income from line 1d reduced by the
1120
1d of Form 8810 and that amount is overall loss, but not below zero. If the
C. Net passive income. See
equal to or greater than the net active instructions for line C below result is zero, skip the rest of the Part I
income on line 2 of Form 8810. D. Subtract line C from line B. If computation.
● The corporation is a closely held zero or less, enter -0- here Line E.—Figure the tax on this amount
corporation with net income on line 3 of and on line E below
as if it were the corporation’s only
E. Tax attributable to line D. See
Form 8810, and the corporation has an instructions for line E below
taxable income.
overall loss from an entire disposition F. Tax attributable to net passive Line J.—If the corporation has net
that is equal to or greater than the net income. Subtract line E from line A. passive income, enter the amount from
income on line 3. Closely held corporations that do not line C on this line. If the corporation has
have net active income and personal
Part I is used by personal service service corporations enter the amount a net loss from line 1d of Form 8810,
corporations and closely held here and on line 7 of Form 8810 enter that amount on line J as a
corporations with net passive income. negative amount.
Part II is used by closely held Part II—Tax Attributable to Net Active Line 9.—If the corporation has one type
corporations that have net active Income of credit, the amount on line 9 is the
income. See the line 2 instructions on G. Enter amount from line E above if Part credit allowed for the year. See
I is completed. Otherwise, enter
page 8 for the definition of net active income tax before credits from Form Reporting Allowed Credits on Tax
income. If the corporation has both net 1120 (Schedule J, line 3) Return on page 12.
passive income and net active income, H. Taxable income from Form Use Worksheet 6 on page 12 to figure
complete Part I and Part II and enter the 1120 how much of the credit on line 9 is
amount from line Q on line 7 of Form I. Net active income
allowed for each activity. Keep a record
8810. J. Net passive income or loss.
See instructions for line J of the unallowed credit and the activity
Note: When using taxable income in the below to which it belongs to figure the credit
computation for line 7, it is not K. Add lines I and J. If less than allowed next year.
-0-, enter as a negative
amount
L. Subtract line K from line H. If
zero or less, enter -0- here
and on line M below
Page 11
Worksheet 6
Use Worksheet 6 to allocate the allowed and unallowed credits for each activity.
Column (a).—Enter the total credits from column (c) of Worksheet 5.
Column (b).—Divide each of the credits in column (a) by the total of all credits in column (a). The total of the ratios should equal
1.00.
Column (c).—Multiply line 8 of Form 8810 by the ratios in column (b) and enter the results in column (c). These are the
unallowed credits for 1995. Keep a record of these amounts so the credits can be carried to the next year.
Column (d).—Subtract column (c) from column (a). These are the allowed credits for 1995. The amounts in this column should
be reported on the forms normally used. See Reporting Allowed Credits on Tax Return below.
Totals © 1.00
Reporting Allowed Credits applying the limitations and adjustments. Part III—Election To Increase
on Tax Return Report the credit on the line specified by
the instructions for the tax return being Basis of Credit Property
Form 3800.—Enter on line 4 of Form filed. Line 10.—Check the box on this line if
3800 the total passive activity general the corporation elects to increase the
business credit allowed from column (d) Credits From PTPs basis of credit property it used in a
of Worksheet 6. passive activity or former passive
A credit from a passive activity held
Form 5735.—Enter on line 17 or line 27 through a PTP is allowed to the extent activity by the unallowed credit that
of Form 5735 any allowed possessions of the tax attributable to net passive reduced the property’s basis. The
corporation tax credit. To the left of the income from that PTP. See page 10 for election is available for a fully taxable
entry write, “PAC.” the definition of a PTP. disposition of an entire interest in an
Form 8586.—If the corporation is not Do not enter credits from PTPs on activity for which a basis adjustment
required to file Form 3800, enter on line Form 8810 or the worksheets. Instead, was made as a result of placing in
7 of Form 8586 any allowed low-income use the following steps to figure the service property for which a credit was
housing credit. allowed and unallowed credits from taken. On such a disposition, the
Form 8834.—Enter on line 12 of Form passive activities held through PTPs: corporation may elect to increase the
8834 the passive activity qualified basis of the credit property immediately
1. Figure the tax attributable to net before the disposition (by an amount no
electric vehicle credit allowed from passive income for each PTP with
column (d) of Worksheet 6. greater than the amount of the original
current year passive activity credits or basis reduction) to the extent that the
Form 8844.—Enter on line 7 of Form prior year unallowed credits. credit has not previously been allowed
8844 the passive activity empowerment 2. Use the smaller of the tax because of the passive credit limitations.
zone employment credit allowed from attributable to net income from passive The amount of the unallowed credit that
column (d) of Worksheet 6. activities of the PTP or the credit may then be applied against tax is
Nonconventional source fuel credit.—If (including prior year unallowed credits) reduced by the amount of the basis
the corporation has an allowed passive from passive activities of the PTP as the adjustment.
activity credit for fuel produced from a amount allowed. Report the allowed No basis adjustment may be elected
nonconventional source, see section 29 credits on the form normally used and on a partial disposition of the
for limitations and adjustments to the keep a record of the unallowed credits corporation’s interest in a passive
credit. Attach a separate schedule to the to be carried to the next year. activity or if the disposition is not fully
tax return showing how the credit was taxable. The amount of any unallowed
figured. Combine any nonpassive credits credit, however, remains available to
for fuel from a nonconventional source offset the tax attributable to net passive
with the passive activity credit before and net active income.