Passive Activity Loss Carryforward

This template tracks the amount of passive activity losses to be carried forward. The passive activity loss (PAL) rules limit the deductibility of a taxpayer’s losses and apply for both regular tax and alternative minimum tax (AMT) purposes.  The PAL rules prevent taxpayers from using losses from passive investments to offset taxable income from nonpassive investments or from trades or businesses.  
Moreover, the rules limit deductions from passive activities to the current or future years—PALs can never be carried back. The PAL rules apply to two types of C corporations—personal service corporations and closely held corporations.

Entering Information

All of the information needed to produce the carryforward schedule is entered on the Input worksheet. The yellow highlighted cells are calculated fields, and no data should be entered in these cells.  Gray cells are not calculated fields, but data should not be entered in these cells.

Enter the following information for each tax year:

  • First tax year of the passive activity loss (Subsequent years are generated automatically.)
  • Regular tax PAL generated
  • AMT PAL generated
  • The total of any AMT adjustments and preferences
  • PAL deducted for regular tax purposes
  • PAL deducted for AMT purposes
Passive Activity Loss Carryforward