Royalties F.8582

[Gretel]

I am confused. Reading instructions for form 8582 I conclude that royalties are passive activity income and can be used to offset rental losses. But my software (ProSeries) does not carry it to that form.

What am I missing?

[Deltax]

I am confused. Reading instructions for form 8582 I conclude that royalties are passive activity income and can be used to offset rental losses. But my software (ProSeries) does not carry it to that form.

What am I missing?

Drake Software

[Bird Legs]

Gabriele

can you manually enter it on the form 8582?

[Gretel]

Thanks guys. Yes, I can manually enter and read through the lines that royaties should be on form 8582.

[jainen]

code section 469(e)(1)

Not so fast. With all due respect to Drake software, Proseries does it correctly. Royalties are portfolio income like interest and dividends. They are specifically, overtly, and categorically excluded from the definition of passive in code section 469(e)(1).

[Gretel]

Not so fast. With all due respect to Drake software, Proseries does it correctly. Royalties are portfolio income like interest and dividends. They are specifically, overtly, and categorically excluded from the definition of passive in code section 469(e)(1).

Thank you so much, Jainen. I now found easily the following on the IRS webpage.

IRC § 469(c) Passive income can only be generated by a rental activity or a business in which the taxpayer does not materially participate.

I wished the instructions for form 8582 were that clear, or maybe I was just too tired.