U.S. Individual Income Tax Return

Department of the Treasury
Internal Revenue Service

2013 Instructions for Schedule E (Form 1040)
Supplemental
Income and Loss

Use Schedule E (Form 1040) to report income or loss from rental real estate, royalties,
partnerships, S corporations, estates, trusts, and residual interests in REMICs.
You can attach your own schedule(s) to report income or loss from any of these
sources. Use the same format as on Schedule E.
Enter separately on Schedule E the total income and the total loss for each part. Enclose loss figures in (parentheses).

Section references are to the Internal
Revenue Code unless otherwise noted.

receipt of certain large gifts or bequests
from certain foreign persons.
Form 4562 to claim depreciation
(including the special allowance) on
assets placed in service in 2013, to claim
amortization that began in 2013, to
make an election under section 179 to
expense certain property, or to report
information on listed property.
Form 4684 to report a casualty or
theft gain or loss involving property
used in your trade or business or
income-producing property.
Form 4797 to report sales,
exchanges, and involuntary conversions
(not from a casualty or theft) of trade or
business property.
Form 6198 to figure your
allowable loss from an at-risk activity.
Form 8082 to notify the IRS of any
inconsistent tax treatment for an item on
your return.
Form 8582 to figure your
allowable loss from passive activities.
Form 8824 to report like-kind
exchanges.
Form 8826 to claim a credit for
expenditures to improve access to your
business for individuals with disabilities.
Form 8873 to figure your
extraterritorial income exclusion.
Form 8910 to claim a credit for
placing a new alternative motor vehicle
in service for business use.
Form 8960 to pay Net Investment
Income Tax on certain income from
your rental and other passive activities.
Single-member limited liability company (LLC). In most cases, a single-member domestic LLC is not treated
as a separate entity for federal income
tax purposes. If you are the sole member
of a domestic LLC, file Schedule E (or
Schedule C, C-EZ, or F, if applicable).
However, you can elect to treat a domes-

Future Developments
For the latest information about developments related to Schedule E (Form
1040) and its instructions, such as legislation enacted after they were published,
go to www.irs.gov/schedulee.

What's New
Standard mileage rate. The standard
mileage rate for miles driven in connection with your rental activities is 56.5
cents per mile.
Net Investment Income Tax. Beginning in 2013, individuals, estates, and
trusts may be subject to the Net Investment Income Tax (NIIT). NIIT is a
3.8% tax on the lesser of net investment
income or the excess of modified adjusted gross income (MAGI) over the
threshold amount. Net investment income may include rental and royalty income, income from partnerships, S corporations and trusts, and income from
other passive activities reported on your
Schedule E. Use Form 8960, Net Investment Income Tax, to figure this tax. For
more information on NIIT, go to
IRS.gov and enter “Net Investment Income Tax” in the search box.

General Instructions
Other Schedules and Forms
You May Have To File
Schedule A (Form 1040) to deduct
interest, taxes, and casualty losses not
related to your business.
Form 3520 to report certain
transactions with foreign trusts and

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Dec 04, 2013

Cat. No. 24332T

tic LLC as a corporation. See Form 8832
for details on the election and the tax
treatment of a foreign LLC.
Information returns. You may have to
file information returns for wages paid
to employees, certain payments of fees
and other nonemployee compensation,
interest, rents, royalties, real estate transactions, annuities, and pensions. You
generally use Form 1099-MISC, Miscellaneous Income, to report rents and payments of fees and other nonemployee
compensation. For details, see Line A,
later, and the 2013 General Instructions
for Certain Information Returns.
If you received cash of more than
$10,000 in one or more related transactions in your trade or business, you may
have to file Form 8300. For details, see
Pub. 1544.

Qualified Joint Venture
If you and your spouse each materially
participate (see Material participation in
the Instructions for Schedule C) as the
only members of a jointly owned and
operated rental real estate business and
you file a joint return for the tax year,
you can elect to be treated as a qualified
joint venture instead of a partnership.
This election, in most cases, will not increase the total tax owed on the joint return. By making the election, you will
not be required to file Form 1065 for
any year the election is in effect and will
instead report the income and deductions directly on your joint return. If you
and your spouse filed Form 1065 for the
year prior to the election, the partnership
terminates at the end of the tax year immediately preceding the year the election takes effect.
Note. Mere joint ownership of property
that is not a trade or business does not
qualify for the election.

Making the election. To make this
election for your rental real estate business, check the “QJV” box on line 2 for
each property that is part of the qualified
joint venture. You must divide all items
of income, gain, loss, deduction, and
credit attributable to the rental real estate
business between you and your spouse
in accordance with your respective interests in the venture. Although you and
your spouse will not each file your own
Schedule E as part of the qualified joint
venture, each of you must report your
interest as separate properties on line 1
of Schedule E. On lines 3 through 22 for
each separate property interest, you must
enter your share of the applicable income, deduction, or loss.
If you have more than three rental real estate or royalty properties, complete
and attach as many Schedules E as you
need to list them. But fill in lines 23a
through 26 on only one Schedule E. The
figures on lines 23a through 26 on that
Schedule E should be the combined totals for all properties reported on your
Schedules E.
Once made, the election can be revoked only with the permission of the
IRS. However, the election technically
remains in effect only for as long as the
spouses filing as a qualified joint venture continue to meet the requirements
to be treated as a qualified joint venture.
If the spouses fail to meet the qualified
joint venture requirements for a year, a
new election will be necessary for any
future year in which the spouses meet
the requirements to be treated as a qualified joint venture.
Rental real estate income generally is
not included in net earnings from
self-employment subject to self-employment tax and generally is subject to passive loss limitation rules. Electing qualified joint venture status does not alter
the application of the self-employment
tax or the passive loss limitation rules.
For more information on qualified
joint ventures, go to IRS.gov and enter
“qualified joint venture” in the search
box.

Reportable Transaction
Disclosure Statement
Use Form 8886 to disclose information
for each reportable transaction in which
you participated. Form 8886 must be

filed for each tax year that your federal
income tax liability is affected by your
participation in the transaction. You may
have to pay a penalty if you are required
to file Form 8886 but do not do so. You
may also have to pay interest and penalties on any reportable transaction understatements. The following are reportable
transactions.
Any listed transaction that is the
same as or substantially similar to tax
avoidance transactions identified by the
IRS.
Any transaction offered to you or a
related party under conditions of confidentiality for which you paid an advisor
a fee of at least $50,000.
Certain transactions for which you
or a related party have contractual protection against disallowance of the tax
benefits.
Certain transactions resulting in a
loss of at least $2 million in any single
tax year or $4 million in any combination of tax years. (At least $50,000 for a
single tax year if the loss arose from a
foreign currency transaction defined in
section 988(c)(1), whether or not the
loss flows through from an S corporation or partnership.)
Certain transactions of interest entered into after November 1, 2006, that
are the same or substantially similar to
transactions that the IRS has identified
by notice, regulation, or other form of
published guidance as transactions of interest.
See the Instructions for Form 8886
for more details.

At-Risk Rules
In most cases, you must complete Form
6198 to figure your allowable loss if you
have:
A loss from an activity carried on
as a trade or business or for the production of income, and
Amounts in the activity for which
you are not at risk.
The at-risk rules in most cases limit
the amount of loss (including loss on the
disposition of assets) you can claim to
the amount you could actually lose in
the activity. However, the at-risk rules
do not apply to losses from an activity of
holding real property placed in service
before 1987. They also do not apply to
losses from your interest acquired before
1987 in a pass-through entity engaged in

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such activity. The activity of holding
mineral property does not qualify for
this exception.
In most cases, you are not at risk for
amounts such as the following.
Nonrecourse loans used to finance
the activity, to acquire property used in
the activity, or to acquire your interest in
the activity that are not secured by your
own property (other than property used
in the activity). However, there is an exception for certain nonrecourse financing borrowed by you in connection with
the activity of holding real property
(other than mineral property). See
Qualified nonrecourse financing, later.
Cash, property, or borrowed
amounts used in the activity (or contributed to the activity, or used to acquire
your interest in the activity) that are protected against loss by a guarantee,
stop-loss agreement, or other similar arrangement (excluding casualty insurance
and insurance against tort liability).
Amounts borrowed for use in the
activity from a person who has an interest in the activity (other than as a creditor) or who is related under section
465(b)(3)(C) to a person (other than
you) having such an interest.
Qualified nonrecourse financing.
Qualified nonrecourse financing is treated as an amount at risk if it is secured
by real property used in an activity of
holding real property subject to the
at-risk rules. Qualified nonrecourse financing is financing for which no one is
personally liable for repayment and is:
Borrowed by you in connection
with the activity of holding real property
(other than mineral property),
Not convertible from a debt obligation to an ownership interest, and
Loaned or guaranteed by any federal, state, or local government, or borrowed by you from a qualified person.
Qualified person. A qualified person is
a person who actively and regularly engages in the business of lending money,
such as a bank or savings and loan association. A qualified person cannot be:
Related to you (unless the nonrecourse financing obtained is commercially reasonable and on substantially
the same terms as loans involving unrelated persons),
The seller of the property (or a person related to the seller), or

A person who receives a fee due to
your investment in real property (or a
person related to that person).
For more details about the at-risk
rules, see the Instructions for Form 6198
and Pub. 925.

Passive Activity Loss Rules
The passive activity loss rules may limit
the amount of losses you can deduct.
These rules apply to losses in Parts I, II,
and III, and line 40 of Schedule E.
Losses from passive activities may be
subject first to the at-risk rules. Losses
deductible under the at-risk rules are
then subject to the passive activity loss
rules.
You can deduct losses from passive
activities in most cases only to the extent of income from passive activities.
An exception for certain rental real estate activities (explained later) may apply.
Passive Activity
A passive activity is any business activity in which you did not materially participate and any rental activity, except as
explained later. If you are a limited partner, in most cases, you are not treated as
having materially participated in the
partnership's activities for the year.
The rental of real or personal property is a rental activity under the passive
activity loss rules in most cases, but exceptions apply. If your rental of property
is not treated as a rental activity, you
must determine whether it is a trade or
business activity, and if so, whether you
materially participated in the activity for
the tax year.
See the Instructions for Form 8582 to
determine whether you materially participated in the activity and for the definition of “rental activity.”
See Pub. 925 for special rules that apply to rentals of:
Substantially nondepreciable property,
Property incidental to development
activities, and
Property related to activities in
which you materially participate.

Activities That Are Not Passive
Activities
Activities of real estate professionals.
If you were a real estate professional for
2013, any rental real estate activity in
which you materially participated is not
a passive activity. You were a real estate
professional for the year only if you met
both of the following conditions.
More than half of the personal
services you performed in trades or businesses during the year were performed
in real property trades or businesses in
which you materially participated.
You performed more than 750
hours of services during the year in real
property trades or businesses in which
you materially participated.
If you are married filing jointly, either you or your spouse must meet both
of the above conditions without taking
into account services performed by the
other spouse.
A real property trade or business is
any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation,
management, leasing, or brokerage trade
or business. Services you performed as
an employee are not treated as performed in a real property trade or business unless you owned more than 5% of
the stock (or more than 5% of the capital
or profits interest) in the employer.
If you qualify as a real estate professional, rental real estate activities in
which you materially participated are
not passive activities. For purposes of
determining whether you materially participated in your rental real estate activities, each interest in rental real estate is a
separate activity unless you elect to treat
all your interests in rental real estate as
one activity. To make this election, attach a statement to your original tax return that declares you are a qualifying
taxpayer for the year and you are making the election under section 469(c)(7)
(A). The election applies for the year
made and all later years in which you
are a real estate professional. You can
revoke the election only if your facts
and circumstances materially change.

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If you did not make this elec­
tion on your timely filed re­
turn, you may be eligible to
make a late election to treat all your in­
terest in rental real estate as one activi­
ty. See Rev. Proc. 2011­34, 2011­24
I.R.B. 875, available at www.irs.gov/irb/
2011­24_IRB/ar07.html.

TIP

If you were a real estate professional for
2013, complete Schedule E, line 43.
Other activities. The rental of a dwelling unit that you used as a home is not
subject to the passive loss limitation
rules. See Line 2, later, to see if you
used the dwelling unit as a home.
A working interest in an oil or gas
well you held directly or through an entity that did not limit your liability is not
a passive activity even if you did not
materially participate.
Royalty income not derived in the ordinary course of a trade or business reported on Schedule E in most cases is
not considered income from a passive
activity.
For more details on passive activities,
see the Instructions for Form 8582 and
Pub. 925.
Exception for Certain Rental Real
Estate Activities
If you meet all of the following conditions, your rental real estate losses are
not limited by the passive activity loss
rules, and you do not need to complete
Form 8582. If you do not meet all of
these conditions, see the Instructions for
Form 8582 to find out if you must complete and attach Form 8582 to figure any
losses allowed.
1. Rental real estate activities are
your only passive activities.
2. You do not have any prior year
unallowed losses from any passive activities.
3. All of the following apply if you
have an overall net loss from these activities:
a. You actively participated (defined
later) in all of the rental real estate activities;
b. If married filing separately, you
lived apart from your spouse all year;
c. Your overall net loss from these
activities is $25,000 or less ($12,500 or
less if married filing separately);

d. You have no current or prior year
unallowed credits from passive activities; and
e. Your modified adjusted gross income (defined later) is $100,000 or less
($50,000 or less if married filing separately).
Active participation. You can meet the
active participation requirement without
regular, continuous, and substantial involvement in real estate activities. But
you must have participated in making
management decisions or arranging for
others to provide services (such as repairs) in a significant and bona fide
sense. Such management decisions include:
Approving new tenants,
Deciding on rental terms,
Approving capital or repair expenditures, and
Other similar decisions.
You are not considered to actively
participate if, at any time during the tax
year, your interest (including your spouse's interest) in the activity was less than
10% by value of all interests in the activity. If you are a limited partner, you
are also not treated as actively participating in a partnership's rental real estate
activities.
Modified adjusted gross income. This
is your adjusted gross income from
Form 1040, line 38, or Form 1040NR,
line 37, without taking into account:
Any allowable passive activity
loss,
Rental real estate losses allowed
for real estate professionals (see Activi­
ties of real estate professionals, earlier),
Taxable social security or tier 1
railroad retirement benefits,
Deductible contributions to a traditional IRA or certain other qualified retirement plans under section 219,
The student loan interest deduction,
The tuition and fees deduction,
The domestic production activities
deduction,
The deduction for one-half of
self-employment tax,
The exclusion from income of interest from series EE and I U.S. savings
bonds used to pay higher education expenses, and
Any excluded amounts under an
employer's adoption assistance program.

Recordkeeping
You must keep records to support items
reported on Schedule E in case the IRS
has questions about them. If the IRS examines your tax return, you may be
asked to explain the items reported.
Good records will help you explain any
item and arrive at the correct tax with a
minimum of effort. If you do not have
records, you may have to spend time
getting statements and receipts from various sources. If you cannot produce the
correct documents, you may have to pay
additional tax and be subject to penalties.

Specific Instructions
Filers of Form 1041. If you are a fiduciary filing Schedule E with Form 1041,
enter the estate's or trust's employer
identification number (EIN) in the space
for “Your social security number.”

Part I
Before you begin, see Line 3
and Line 4, later, to determine
CAUTION
if you should report your rent­
al real estate and royalty income on
Schedule C, Schedule C­EZ, or Form
4835, instead of Schedule E.

!

Line A
If you made any payments in 2013 that
would require you to file any Forms
1099, check the “Yes” box. Otherwise,
check the “No” box. See the 2013 General Instructions for Certain Information
Returns if you are unsure whether you
were required to file any Forms 1099.
Also see the separate instructions for
each Form 1099.
Generally, you must file Form
1099­MISC if you paid at least
$600 in rents, services, prizes,
medical and health care payments, and
other income payments. The Guide to
Information Returns in the 2013 Gener­
al Instructions for Certain Information
Returns has more information, including
the due dates for the various information
returns.

TIP

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Income or Loss From
Rental Real Estate and
Royalties
Use Part I to report the following.
Income and expenses from rental
real estate (including personal property
leased with real estate).
Royalty income and expenses.
For an estate or trust only, farm
rental income and expenses based on
crops or livestock produced by the tenant. Estates and trusts do not use Form
4835 or Schedule F (Form 1040) for this
purpose.
If you own a part interest in a rental
real estate property, report only your
part of the income and expenses on
Schedule E.
Complete lines 1 and 2 for each rental real estate property. For royalty properties, line 2 and the address portion on
line 1 should be left blank and you
should enter code “6” for royalty property.
If you have more than three rental real estate or royalty properties, complete
and attach as many Schedules E as you
need to list them. But answer lines A
and B and fill in lines 23a through 26 on
only one Schedule E. The figures on
lines 23a through 26 on that Schedule E
should be the combined totals for all
properties reported on your Schedules E.
If you are also using page 2 of Schedule E, use the same Schedule E on
which you entered the combined totals
for Part I.
Personal property. Do not use Schedule E to report income and expenses
from the rental of personal property,
such as equipment or vehicles. Instead,
use Schedule C or C-EZ if you are in the
business of renting personal property.
You are in the business of renting personal property if the primary purpose for
renting the property is income or profit
and you are involved in the rental activity with continuity and regularity.
If your rental of personal property is
not a business, see the instructions for
Form 1040, lines 21 and 36, to find out
how to report the income and expenses.
Extraterritorial income exclusion.
Except as otherwise provided in the Internal Revenue Code, gross income includes all income from whatever source

derived. Gross income, however, does
not include extraterritorial income that is
qualifying foreign trade income under
certain circumstances. Use Form 8873 to
figure the extraterritorial income exclusion. Report it on Schedule E as explained in the Instructions for Form
8873.
Chapter 11 bankruptcy cases. If you
were a debtor in a chapter 11 bankruptcy
case, see Chapter 11 Bankruptcy Cases
under Income in the Instructions for
Form 1040.

Line 1a
For rental real estate property only,
show the street address, city or town,
state, and ZIP code. If the property is located in a foreign country, enter the city,
province or state, country, and postal
code.

Line 1b
For the type of property, enter one of the
codes listed under “Type of Property” in
Part I of the form.
Self-rental. Enter code type “7” for
self-rental if you rent property to a trade
or business in which you materially participated. See Rental of Property to a
Nonpassive Activity in Pub. 925 for details about the tax treatment of income
from this type of rental property.
Other. Enter code type “8” if the property is not one of the other types listed
on the form. Attach a statement to your
return describing the property.

Line 2
If you rented out a dwelling unit that
you also used for personal purposes during the year, you may not be able to deduct all the expenses for the rental part.
“Dwelling unit” (unit) means a house,
apartment, condominium, or similar
property.

Anyone in your family (or in the
family of someone else who owns part
of the unit), unless the unit is rented at a
fair rental price to that person as his or
her main home,
Anyone who pays less than a fair
rental price for the unit, or
Anyone under an agreement that
lets you use some other unit.
Do not count as personal use:
Any day you spent working substantially full time repairing and maintaining the unit, even if family members
used it for recreational purposes on that
day, or
Any days you used the unit as your
main home before or after renting it or
offering it for rent, if you rented or tried
to rent it for at least 12 consecutive
months (or for a period of less than 12
consecutive months at the end of which
you sold or exchanged it).
Whether or not you can deduct expenses for the unit depends on whether
or not you used the unit as a home in
2013. You used the unit as a home if
your personal use of the unit was more
than the greater of:
14 days, or
10% of the total days it was rented
to others at a fair rental price.
If you did not use the unit as a home,
you can deduct all your expenses for the
rental part, subject to the at-risk rules
and the passive activity loss rules explained earlier.
If you did use the unit as a home and
rented the unit out for fewer than 15
days in 2013, do not report the rental income and do not deduct any rental expenses. If you itemize deductions on
Schedule A, you can deduct allowable
interest, taxes, and casualty losses.

For each property listed on line 1a,
report the number of days in the year
each property was rented at fair rental
value and the number of days of personal use.

If you did use the unit as a home and
rented the unit out for 15 or more days
in 2013, you may not be able to deduct
all your rental expenses. You can deduct
all the following expenses for the rental
part on Schedule E.

A day of personal use is any day, or
part of a day, that the unit was used by:
You for personal purposes,
Any other person for personal purposes, if that person owns part of the
unit (unless rented to that person under a
“shared equity” financing agreement),

Mortgage interest.
Real estate taxes.
Casualty losses.
Other rental expenses not related to
your use of the unit as a home, such as
advertising expenses and rental agents'
fees.

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If any income is left after deducting
these expenses, you can deduct other expenses, including depreciation, up to the
amount of remaining income. You can
carry over to 2014 the amounts you cannot deduct.
Regardless of whether you
used the unit as a home, expen­
CAUTION
ses related to days of personal
use do not qualify as rental expenses.
You must allocate your expenses based
on the number of days of personal use to
total use of the property. For example,
you used your property for personal use
for 7 days and rented it for 63 days. In
most cases, 10% (7÷70) of your expen­
ses are not rental expenses and cannot
be deducted on Schedule E.

!

See Pub. 527 for details.
QJV. Check the box for “QJV” if you
owned the property as a member of a
qualified joint venture reporting income
not subject to self-employment tax. See
Qualified Joint Venture, earlier.

Line 3
If you received rental income from real
estate (including personal property
leased with real estate), report the income on line 3. Use a separate column
(A, B, or C) for each rental property. Include income received for renting a
room or other space.
If you received services or property
instead of money as rent, report the fair
market value of what you received as
rental income on line 3.
If you provided significant services to
the renter, such as maid service, report
the rental activity on Schedule C or
C-EZ, not on Schedule E. Significant
services do not include the furnishing of
heat and light, cleaning of public areas,
trash collection, or similar services.
If you were a real estate dealer, include only the rent received from real
estate (including personal property
leased with this real estate) you held for
the primary purpose of renting to produce income. Do not use Schedule E to
report income and expenses from rentals
of real estate you held for sale to customers in the ordinary course of your
business as a real estate dealer. Instead
use Schedule C or C-EZ for those rentals.

For more details on rental income,
use TeleTax topic 414 ( see What is Tel­
eTax? in the Instructions for Form
1040), or see Pub. 527.
Rental income from farm production
or crop shares. Report farm rental income and expenses on Form 4835 if:
You are an individual,
You received rental income based
on crops or livestock produced by the
tenant, and
You did not materially participate
in the management or operation of the
farm.

Line 4
Report on line 4 royalties from oil, gas,
or mineral properties (not including operating interests); copyrights; and patents. Use a separate column (A, B, or C)
for each royalty property.
If you received $10 or more in royalties during 2013, the payer should send
you a Form 1099-MISC or similar statement by January 31, 2014, showing the
amount you received. Report this
amount on line 4.
If you are in business as a self-employed writer, inventor, artist, etc., report your royalty income and expenses
on Schedule C or C-EZ.
You may be able to treat amounts received as “royalties” for the transfer of a
patent or amounts received on the disposal of coal and iron ore as the sale of a
capital asset. For details, see Pub. 544.
Enter on line 4 the gross amount of
rent and royalty income, even if state or
local taxes were withheld from oil or gas
payments you received. Include taxes
withheld by the producer on line 16.

General Instructions for
Lines 5 Through 21
Enter your rental and royalty expenses
for each property in the appropriate column. You can deduct all ordinary and
necessary expenses, such as taxes, interest, repairs, insurance, management fees,
agents' commissions, and depreciation.
Do not deduct the value of your own
labor or amounts paid for capital investments or capital improvements.
Enter your total expenses for mortgage interest (line 12), depreciation expenses and depletion (line 18), and total

expenses (line 20) on lines 23c through
23e, respectively, even if you have only
one property.
Renting out part of your home. If you
rent out only part of your home or other
property, deduct the part of your expenses that applies to the rented part.
Credit or deduction for access expenditures. You may be able to claim a tax
credit for eligible expenditures paid or
incurred in 2013 to provide access to
your business for individuals with disabilities. See Form 8826 for details.
You can also elect to deduct up to
$15,000 of qualified costs paid or incurred in 2013 to remove architectural or
transportation barriers to individuals
with disabilities and the elderly.
You cannot take both the credit and
the deduction for the same expenditures.

Line 6
You can deduct ordinary and necessary
auto and travel expenses related to your
rental activities, including 50% of meal
expenses incurred while traveling away
from home. In most cases you can either
deduct your actual expenses or take the
standard mileage rate. You must use actual expenses if you used more than four
vehicles simultaneously in your rental
activities (as in fleet operations). You
cannot use actual expenses for a leased
vehicle if you previously used the standard mileage rate for that vehicle.
You can use the standard mileage
rate for 2013 only if you:
Owned the vehicle and used the
standard mileage rate for the first year
you placed the vehicle in service, or
Leased the vehicle and are using
the standard mileage rate for the entire
lease period (except the period, if any,
before 1998).
If you take the standard mileage rate,
multiply the number of miles driven in
connection with your rental activities by
56.5 cents per mile. Include this amount
and your parking fees and tolls on line 6.
You cannot deduct rental or
lease payments, depreciation,
CAUTION
or your actual auto expenses if
you use the standard mileage rate.

!

If you deduct actual auto expenses:
Include on line 6 the rental activity
portion of the cost of gasoline, oil, re-

E-6

pairs, insurance, tires, license plates,
etc., and
Show auto rental or lease payments
on line 19 and depreciation on line 18.
If you claim any auto expenses (actual or the standard mileage rate), you
must complete Part V of Form 4562 and
attach Form 4562 to your tax return.
See Pub. 527 and Pub. 463 for details.

Line 10
Include on line 10 fees for tax advice
and the preparation of tax forms related
to your rental real estate or royalty properties.
Do not deduct legal fees paid or incurred to defend or protect title to property, to recover property, or to develop
or improve property. Instead, you must
capitalize these fees and add them to the
property's basis.

Lines 12 and 13
In most cases, to determine the interest
expense allocable to your rental activities, you must have records to show how
the proceeds of each debt were used.
Specific tracing rules apply for allocating debt proceeds and repayment. See
Pub. 535 for details.
If you have a mortgage on your rental
property, enter on line 12 the amount of
interest you paid for 2013 to banks or
other financial institutions.
Do not deduct prepaid interest when
you paid it. You can deduct it only in the
year to which it is properly allocable.
Points, including loan origination fees,
charged only for the use of money must
be deducted over the life of the loan.
If you paid $600 or more in interest
on a mortgage during 2013, the recipient
should send you a Form 1098 or similar
statement by January 31, 2014, showing
the total interest received from you.
If you paid more mortgage interest
than is shown on your Form 1098 or
similar statement, see Pub. 535 to find
out if you can deduct part or all of the
additional interest. If you can, enter the
entire deductible amount on line 12. Attach a statement to your return explaining the difference. In the space to the
left of line 12, enter “See attached.”

Note. If the recipient was not a financial institution or you did not receive a
Form 1098 from the recipient, report
your deductible mortgage interest on
line 13.
If you and at least one other person
(other than your spouse if you file a joint
return) were liable for and paid interest
on the mortgage, and the other person
received Form 1098, report your share
of the deductible interest on line 13. Attach a statement to your return showing
the name and address of the person who
received Form 1098. On the dotted line
next to line 13, enter “See attached.”

Line 14
You can deduct the cost of repairs made
to keep your property in good working
condition. Repairs in most cases do not
add significant value to the property or
extend its life. Examples of repairs are
fixing a broken lock or painting a room.
Improvements that increase the value of
the property or extend its life, such as
replacing a roof or renovating a kitchen,
must be capitalized and depreciated (that
is, they cannot be deducted in full in the
year they are paid or incurred). See
Line 18, later.

Line 17
You can deduct the cost of ordinary and
necessary telephone calls related to your
rental activities or royalty income (for
example, calls to the renter). However,
the base rate (including taxes and other
charges) for local telephone service for
the first telephone line into your residence is a personal expense and is not
deductible.

Line 18
Depreciation is the annual deduction
you must take to recover the cost or other basis of business or investment property having a useful life substantially beyond the tax year. Land is not depreciable.
Depreciation starts when you first use
the property in your business or for the
production of income. It ends when you
deduct all your depreciable cost or other
basis or no longer use the property in
your business or for the production of
income.

See the Instructions for Form 4562 to
figure the amount of depreciation to enter on line 18.
You must complete and attach Form
4562 only if you are claiming:
Depreciation on property first
placed in service during 2013,
Depreciation on listed property
(defined in the Instructions for Form
4562), including a vehicle, regardless of
the date it was placed in service, or
A section 179 expense deduction
or amortization of costs that began in
2013.
See Pub. 527 for more information on
depreciation of residential rental property. See Pub. 946 for a more comprehensive guide to depreciation.
If you have an economic interest in
mineral property, you may be able to
take a deduction for depletion. Mineral
property includes oil and gas wells,
mines, and other natural deposits (including geothermal deposits). See Pub.
535 for details.
Separating cost of land and buildings.
If you buy buildings and your cost includes the cost of the land on which they
stand, you must divide the cost between
the land and the buildings to figure the
basis for depreciation of the buildings.
The part of the cost that you allocate to
each asset is the ratio of the fair market
value of that asset to the fair market value of the whole property at the time you
buy it.
If you are not certain of the fair market values of the land and the buildings,
you can divide the cost between them
based on their assessed values for real
estate tax purposes.

Line 19
Enter on line 19 any ordinary and necessary expenses not listed on lines 5
through 18.
You may be able to deduct, on
line 19, part or all of the cost of modifying existing commercial buildings to
make them energy efficient. For details,
see section 179D, Notice 2006-52, Notice 2008-40, and Notice 2012-26. You
can find Notice 2006-52 on page 1175
of Internal Revenue Bulletin 2006-26 at
www.irs.gov/irb/2006­26_IRB/
ar11.html. You can find Notice 2008-40
on page 725 of Internal Revenue Bulle-

E-7

tin
2008-14
at
www.irs.gov/irb/
2008­14_IRB/ar12.html. You can find
Notice 2012-26 on page 847 of Internal
Revenue
Bulletin
2012-17
at
www.irs.gov/irb/2012­17_IRB/
ar08.html.

Line 21
If you have amounts for which you are
not at risk, use Form 6198 to determine
the amount of your deductible loss. Enter that amount in the appropriate column of Schedule E, line 21. In the space
to the left of line 21, enter “Form 6198.”
Attach Form 6198 to your return. For
details on the at-risk rules, see At­Risk
Rules, earlier.

Line 22
Do not complete line 22 if the amount
on line 21 is from royalty properties.
If you have a rental real estate loss
from a passive activity (defined earlier),
the amount of loss you can deduct may
be limited by the passive activity loss
rules. You may need to complete Form
8582 to figure the amount of loss, if any,
to enter on line 22. See the Instructions
for Form 8582 to determine if your loss
is limited.
If your rental real estate loss is not
from a passive activity or you meet the
exception for certain rental real estate
activities (explained earlier), you do not
have to complete Form 8582. Enter the
loss from line 21 on line 22.
If you have an unallowed rental real
estate loss from a prior year that after
completing Form 8582 you can deduct
this year, include that loss on line 22.

Parts II and III
If you need more space in Part II or III
to list your income or losses, attach a
continuation sheet using the same format as shown in Part II or III. However,
be sure to complete the “Totals” columns for lines 29a and 29b, or lines 34a
and 34b, as appropriate. If you also
completed Part I on more than one
Schedule E, use the same Schedule E on
which you entered the combined totals
in Part I.
Tax preference items. If you are a
partner, a shareholder in an S

corporation, or a beneficiary of an estate
or trust, you must take into account your
share of preferences and adjustments
from these entities for the alternative
minimum tax on Form 6251 or Schedule I (Form 1041).

Part II
Income or Loss From
Partnerships and S
Corporations
If you are a member of a partnership or
joint venture or a shareholder in an S
corporation, use Part II to report your
share of the partnership or S corporation
income (even if not received) or loss.
If you elected to be taxed as a
qualified joint venture instead
CAUTION
of a partnership, follow the re­
porting rules under Qualified Joint Venture, earlier.

!

You should receive a Schedule K-1
from the partnership or S corporation.
You should also receive a copy of the
Partner's or Shareholder's Instructions
for Schedule K-1. Your copy of Schedule K-1 and its instructions will tell you
where on your return to report your
share of the items. If you did not receive
these instructions with your Schedule K-1, see the instructions for Form
1040 or Form 1040NR for how to get
tax forms, instructions, and publications.
Do not attach Schedules K-1 to your return. Keep them for your records.
If you are treating items on your tax
return differently from the way the partnership (other than an electing large
partnership) or S corporation reported
them on its return, you may have to file
Form 8082. If you are a partner in an
electing large partnership, you must report the items shown on Schedule K-1
(Form 1065-B) on your tax return the
same way the partnership reported the
items on Schedule K-1.
Special rules that limit losses. Please
note the following.
If you have an interest in a partnership or S corporation that is involved in
a farming business, your losses may be
limited if the partnership accepted certain subsidies. You will be notified on
the Schedule K-1 if the partnership or S
corporation received one of these subsi-

dies. Use Worksheet 1 on the last page
of these instructions to determine if you
have an excess farm loss for the current
year. See the Instructions for Schedule F
for more details on how to complete the
worksheet. If you had a loss from a partnership or S corporation that was not allowed last year because of the excess
farm loss rules, see Line 27 later, for
how to report it.
If you have other farming busi­
nesses requiring you to file
CAUTION
Schedule F or any Schedule C
activity of processing a farm commodity,
you should use one of the worksheets in
the Instructions for Schedule F instead
of Worksheet 1 on the last page of these
instructions.

!

If you have a current year loss, or a
prior year unallowed loss, from a partnership or an S corporation, see At­Risk
Rules and Passive Activity Loss Rules,
earlier.
Partners and S corporation shareholders should get a separate statement of income, expenses, deductions, and credits
for each activity engaged in by the partnership and S corporation. If you are
subject to the at-risk rules for any activity, check the box on the appropriate line
in Part II, column (e) of Schedule E, and
use Form 6198 to figure the amount of
any deductible loss. If the activity is
nonpassive, enter any deductible loss
from Form 6198 on the appropriate line
in Part II, column (h) of Schedule E.
If you have a passive activity loss,
in most cases you need to complete
Form 8582 to figure the amount of the
allowable loss to enter in Part II, column
(f), for that activity. But if you are a
general partner or an S corporation
shareholder reporting your share of a
partnership or an S corporation loss
from a rental real estate activity and you
meet all of the conditions listed earlier
under Exception for Certain Rental Real
Estate Activities, you do not have to
complete Form 8582. Instead, enter your
allowable loss in Part II, column (f).
If you have passive activity income,
complete Part II, column (g), for that activity.
If you have nonpassive income or
losses, complete Part II, columns (h)
through (j), as appropriate.

E-8

Domestic Partnerships
See the Schedule K-1 instructions before
entering on your return other partnership
items from a passive activity or income
or loss from any publicly traded partnership.
You can deduct unreimbursed ordinary and necessary expenses you paid on
behalf of the partnership if you were required to pay these expenses under the
partnership agreement. See Line 27, later, for how to report these expenses.
Report allowable interest expense
paid or incurred from debt-financed acquisitions in Part II or on Schedule A
depending on the type of expenditure to
which the interest is allocated. See Pub.
535 for details.
If you claimed a credit for federal tax
on gasoline or other fuels on your 2012
Form 1040 or Form 1040NR based on
information received from the partnership, enter as income in column (g) or
column (j), whichever applies, the
amount of the credit claimed for 2012.
Part or all of your share of partnership income or loss from the operation
of the business may be considered net
earnings from self-employment that
must be reported on Schedule SE. Enter
the amount from Schedule K-1 (Form
1065), box 14, code A (or from Schedule K-1 (Form 1065-B), box 9 (code
J1)), on Schedule SE, after you reduce
this amount by any allowable expenses
attributable to that income.
Foreign Partnerships
Follow the instructions below in addition to the instructions earlier for Do­
mestic Partnerships.
If you are a U.S. person, you may
have
received
Forms
1099-B,
1099-DIV, and 1099-INT reporting your
share of certain partnership income, because payors of income to the foreign
partnership in most cases are required to
allocate and report payments of that income directly to each of the partners of
the foreign partnership. If you received
both Schedule K-1 and Form 1099 for
the same type and source of partnership
income, report only the income shown
on Schedule K-1 in accordance with its
instructions.
If you are not a U.S. person, you may
have received Forms 1042-S reporting

your share of certain partnership income, because payors of income to the
foreign partnership in most cases are required to allocate and report payments
of that income directly to each of the
partners of the foreign partnership. If
you received both Schedule K-1 and
Form 1042-S for the same type and
source of partnership income, report the
income on your return as follows.
For all income effectively connected with the conduct of a trade or business in the United States, report only the
income shown on Schedule K-1 in accordance with its instructions.
For all income not effectively connected with the conduct of a trade or
business in the United States, report on
page 4 of Form 1040NR only the income shown on Form 1042-S (if you are
required to file Form 1040NR).
Requirement to file Form 8865. If you
are a U.S. person, you may have to file
Form 8865 if any of the following applies.
1. You controlled a foreign partnership (that is, you owned more than a
50% direct or indirect interest in the
partnership).
2. You owned at least a 10% direct
or indirect interest in a foreign partnership while U.S. persons controlled that
partnership.
3. You had an acquisition, disposition, or change in proportional interest
of a foreign partnership that:
a. Increased your direct interest to at
least 10% or reduced your direct interest
of at least 10% to less than 10%, or
b. Changed your direct interest by at
least a 10% interest.
4. You contributed property to a foreign partnership in exchange for a partnership interest if:
a. Immediately after the contribution, you owned, directly or indirectly,
at least a 10% interest in the partnership,
or
b. The value of the property you
contributed, when added to the value of
any other property you or any related
person contributed to the partnership
during the 12-month period ending on
the date of transfer, exceeds $100,000.

viously contributed to that partnership if
you were a partner at the time of the disposition.
For more details, including penalties
for failing to file Form 8865, see Form
8865 and its separate instructions.
S Corporations
If you are a shareholder in an S corporation, your share of the corporation's aggregate losses and deductions (combined
income, losses, and deductions) is in
most cases limited to the adjusted basis
of your corporate stock and any debt the
corporation owes you. Any loss or deduction not allowed this year because of
the basis limitation can be carried forward and deducted in a later year subject
to the basis limitation for that year.
If you are claiming a deduction for
your share of an aggregate loss, attach to
your return a computation of the adjusted basis of your corporate stock and of
any debt the corporation owes you. See
the Schedule K-1 instructions for details.
After applying the basis limitation,
the deductible amount of your aggregate
losses and deductions may be further reduced by the at-risk rules and the passive activity loss rules. See At­Risk
Rules and Passive Activity Loss Rules
earlier.
Distributions of prior year accumulated earnings and profits of S corporations are dividends and are reported on
Form 1040, line 9a.
Interest expense relating to the acquisition of shares in an S corporation
may be fully deductible on Schedule E.
For details, see Pub. 535.
Your share of the net income of an S
corporation is not subject to self-employment tax.

Line 27
If you answered “Yes” on line 27, follow the instructions below. If you fail to
follow these instructions, the IRS may
send you a notice of additional tax due
because the amounts reported by the
partnership or S corporation on Schedule K-1 do not match the amounts you
reported on your tax return.

Also, you may have to file Form
8865 to report certain dispositions by a
foreign partnership of property you pre-

E-9

Losses Not Allowed in Prior Years
Due to the At-Risk, Excess Farm
Loss, or Basis Limitations
Enter your total prior year unallowed losses that are now deductible on
a separate line in column (h) of line 28.
Do not combine these losses with, or net
them against, any current year amounts
from the partnership or S corporation.
Enter “PYA” in column (a) of the
same line.
Prior Year Unallowed Losses
From a Passive Activity Not
Reported on Form 8582
Enter on a separate line in column
(f) of line 28 your total prior year unallowed losses not reported on Form 8582.
Such losses include prior year unallowed losses now deductible because
you did not have an overall loss from all
passive activities or you disposed of
your entire interest in a passive activity
in a fully taxable transaction. Do not
combine these losses with, or net them
against, any current year amounts from
the partnership or S corporation.
Enter “PYA” in column (a) of the
same line.
Unreimbursed Partnership
Expenses
You can deduct unreimbursed ordinary and necessary partnership expenses
you paid on behalf of the partnership on
Schedule E if you were required to pay
these expenses under the partnership
agreement (except amounts deductible
only as itemized deductions, which you
must enter on Schedule A).
Enter unreimbursed partnership expenses from nonpassive activities on a
separate line in column (h) of line 28.
Do not combine these expenses with, or
net them against, any other amounts
from the partnership.
If the expenses are from a passive
activity and you are not required to file
Form 8582, enter the expenses related to
a passive activity on a separate line in
column (f) of line 28. Do not combine
these expenses with, or net them against,
any other amounts from the partnership.
Enter “UPE” in column (a) of the
same line.

Line 28
For nonpassive income or loss (and passive income or losses for which you are
not filing Form 8582), enter in the applicable column of line 28 your current
year ordinary income or loss from the
partnership or S corporation. Report
each related item required to be reported
on Schedule E (including items of income or loss stated separately on Schedule K-1) in the applicable column of a
separate line following the line on which
you reported the current year ordinary
income or loss. Also enter a description
of the related item (for example, depletion) in column (a) of the same line.
If you are required to file Form 8582,
see the Instructions for Form 8582 before completing Schedule E.

Part III
Income or Loss From
Estates and Trusts
If you are a beneficiary of an estate or
trust, use Part III to report your part of
the income (even if not received) or loss.
You should receive a Schedule K-1
(Form 1041) from the fiduciary. Your
copy of Schedule K-1 and its instructions will tell you where on your return
to report the items from Schedule K-1.
Do not attach Schedule K-1 to your return. Keep it for your records.
If you are treating items on your tax
return differently from the way the estate or trust reported them on its return,
you may have to file Form 8082.
If you have estimated taxes credited
to you from a trust (Form 1041, Schedule K-1, box 13, code A), enter “ES payment claimed” and the amount on the
dotted line next to line 37. Do not include this amount in the total on line 37.
Instead, enter the amount on Form 1040,
line 63, or Form 1040NR, line 62.
A U.S. person who transferred property to a foreign trust may have to report
the income received by the trust as a result of the transferred property if, during
2013, the trust had a U.S. beneficiary.
See section 679. An individual who received a distribution from, or who was
the grantor of or transferor to, a foreign
trust must also complete Part III of

Schedule B (Form 1040A or 1040) and
may have to file Form 3520. In addition,
the owner of a foreign trust must ensure
that the trust files an annual information
return on Form 3520-A.

Part IV
Income or Loss From Real
Estate Mortgage Investment
Conduits (REMICs)
If you are the holder of a residual interest in a REMIC, use Part IV to report
your total share of the REMIC's taxable
income or loss for each quarter included
in your tax year. You should receive
Schedule Q (Form 1066) and instructions from the REMIC for each quarter.
Do not attach Schedule(s) Q to your return. Keep them for your records.
If you are treating REMIC items on
your tax return differently from the way
the REMIC reported them on its return,
you may have to file Form 8082.
If you are the holder of a residual interest in more than one REMIC, attach a
continuation sheet using the same format as in Part IV. Enter the combined
totals of columns (d) and (e) on Schedule E, line 39. If you also completed Part
I on more than one Schedule E, use the
same Schedule E on which you entered
the combined totals in Part I.
REMIC income or loss is not income
or loss from a passive activity.
Note. If you are the holder of a regular
interest in a REMIC, do not use Schedule E to report the income you received.
Instead, report it on Form 1040, line 8a.
Column (c). Report the total of the
amounts shown on Schedule(s) Q,
line 2c. This is the smallest amount you
are allowed to report as your taxable income (Form 1040, line 43). It is also the
smallest amount you are allowed to report as your alternative minimum taxable income (AMTI) on Form 6251,
line 28.
If the amount in column (c) is larger
than your taxable income would otherwise be, enter the amount from column
(c) on Form 1040, line 43. Similarly, if
the amount in column (c) is larger than
your AMTI would otherwise be, enter
the amount from column (c) on Form

E-10

6251, line 28. Enter “Sch Q” on the dotted line to the left of this amount on
Form 1040, line 43, and Form 6251,
line 28, if applicable.
Note. These rules also apply to estates
and trusts that hold a residual interest in
a REMIC. Be sure to make the appropriate entries on the comparable lines on
Form 1041.

!

CAUTION

Do not include the amount
shown in column (c) in the to­
tal on Schedule E, line 39.

Column (e). Report the total of the
amounts shown on Schedule(s) Q,
line 3b. If you itemize your deductions,
include this amount on Schedule A
(Form 1040), line 23.

Part V
Summary
Line 42
You will not be charged a penalty for
underpayment of estimated tax if:
1. Your gross farming or fishing income for 2012 or 2013 is at least
two-thirds of your gross income, and
2. You file your 2013 tax return and
pay the tax due by March 3, 2014.
Paperwork Reduction Act Notice. We
ask for the information on this form to
carry out the Internal Revenue laws of
the United States. You are required to
give us the information. We need it to
ensure that you are complying with
these laws and to allow us to figure and
collect the right amount of tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally,
tax returns and return information are
confidential, as required by section
6103.
The time needed to complete and file
this form will vary depending on individual circumstances. The estimated
burden for individual taxpayers filing
this form is included in the estimates

shown in the instructions for their individual income tax return. The estimated
burden for all other taxpayers who file
this form is approved under OMB control number 1545-1972 and is shown
next.

Recordkeeping . . . . . . . . .
Learning about the law or the
form . . . . . . . . . . . . . . .
Preparing the form . . . . . .
Copying, assembling, and
sending the form to the IRS .

E-11

3 hrs., 3 min.
1 hr., 2 min.
1 hr., 34 min.
34 min.

If you have comments concerning the
accuracy of these time estimates or suggestions for making this form simpler,
we would be happy to hear from you.
See the instructions for the tax return
with which this form is filed.

Worksheet 1 — Excess farm loss from an interest in a
partnership or S corporation involved in
farming business(es)

Keep for Your Records

!

In determining if you have an excess farm loss, do not take into account any deductions for losses arising by reason of fire, storm, or other casualty, or
by reason of disease or drought, involving your farm businesses.
CAUTION

Note. When instructed in the worksheet below to enter an amount from line 30, 31, or 32 of Schedule E, include only the amount
on that line that relates to farming businesses.
1. Enter the amount from your 2013 Schedule(s) E, line 31. If this amount is less
than $300,000 ($150,000 if married filing separately), stop here; you do not
have an excess farm loss in 2013. If more than $300,000 ($150,000 if married
filing separately), continue to line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.

2. Subtract $300,000 ($150,000 if married filing separately) from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Enter the amount from your 2013 Schedule(s) E, line 30 . . . . . . . . . . . . . . . . . .

2.

3.

4. Is line 3 greater than or equal to line 2? If yes, stop here; you do not have an
excess farm loss in 2013. If no, continue to line 5
5. Enter your net gain/loss from the sale of farming business property reported on
Form 4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.

6. Enter your net gain/loss from the sale of farming business property reported on
Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.

7. Combine line 5 and line 6. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.

8. Add line 3 and line 7. Is this greater than or equal to line 2? If yes, stop here; you do not have an excess
farm loss in 2013. If no, continue to line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.

9. Enter the amount from your 2012 Schedule(s) E, line 32 . . . . . . . . . . . . . . . . . .

9.

10. Enter your combined net gain/loss from the sale of farming business property
reported on your 2012 Form 4797 and Schedule D. If zero or less,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
11. Enter the amount from your 2011 Schedule(s) E, line 32 . . . . . . . . . . . . . . . . . . 11.
12. Enter your combined net gain/loss from the sale of farming business property
reported on your 2011 Form 4797 and Schedule D. If zero or less,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
13. Enter the amount from your 2010 Schedule(s) E, line 32 . . . . . . . . . . . . . . . . . . 13.
14. Enter your combined net gain/loss from the sale of farming business property
reported on your 2010 Form 4797 and Schedule D. If zero or less,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
15. Enter the amount from your 2009 Schedule(s) E, line 32 . . . . . . . . . . . . . . . . . . 15.
16. Enter your combined net gain/loss from the sale of farming business property
reported on your 2009 Form 4797 and Schedule D. If zero or less,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
17. Enter the amount from your 2008 Schedule(s) E, line 32 . . . . . . . . . . . . . . . . . . 17.
18. Enter your combined net gain/loss from the sale of farming business property
reported on your 2008 Form 4797 and Schedule D. If zero or less,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
19. Combine lines 9 through 18. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.
20. Enter the greater of line 19 or $300,000 ($150,000 if married filing separately) . . . . . . . . . . . . . . . . . . . 20.
21. Add line 8 and line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
22. Excess farm loss. Subtract line 1 from line 21. If zero or less, you have an excess farm loss that
reduces the amount of loss you can deduct this year. If you have more than one farming business with
an overall loss this year, allocate the excess farm loss amount on a pro rata basis among those farming
businesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.

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