Ryan and Blake Lively are married filing jointly taxpayers. Ryan's birthdate is August 10, 1982 and Social Security number is 434-14-4448. Blake's birthdate is March 19, 1983 and their Social Security number is 763-16-1562. They live at 22 Thornton Road, Nashua, NH 03063. Both are self-employed.

The Livelys received the following statement from their brokerage account (see separate tab).

The U.S. Treasury interest is associated with bonds that also have market discount. The accrued market discount in 2022 was $45.02. The Livelys elect to recognize market discount in the year earned.

Blake started a new life coach business in 2022 as a sole proprietor. The business office is located at 4 Townsend W, Suite 8, Nashua, NH 03063. The business code is 812990. The financial results are:

Client revenue	$5,000
Office rent expense	12,000
Supplies	1,000
Utilities	300
Telephone	360

During 2022, Ryan invested in Vaporcoin, a virtual currency. He purchased 40 units of Vaporcoin for $3,000 on February 2, 2022. On May 15, 2022, he exchanged the Vaporcoin into dollars when the value was $3,500. He did not receive a 1099-B from the Vaporcoin account.

Ryan also operates a small business teaching fitness classes in a park near their house. The business code is 812190. Ryan has a loyal clientele, and the books and records show the following:

Exercise class receipts	$4,000
Exercise clothes	1,000
Various exercise supplies	1,700

The exercise clothes that Blake purchased are not dissimilar to any other type of workout clothing.

Neither business has employees, an EIN or inventory. Both businesses are accounted for using the cash basis of accounting.

Ryan and Blake own a rental property located at 52 Charlotte Ave, Nashua, NH 03064. The condo was rented all year but is in need of an update. The condo's finances are as follows:

Rent	$8,000
Interest	10,000
Property taxes	3,000
Utilities	1,400
Maintenance	100

Ryan and Blake made a $400 estimated payment on September 15, 2022.

Required:
Complete the Livelys' federal tax return for 2022. Use Form 1040, Schedule 1, Schedule 2, Schedule B, Schedule C (two of them), Schedule D, Form 8949, Schedule E, Schedule SE, Form 8995, Form 8582 (page 1 only) to complete this tax return. Also, to compute the Livelys' net operating loss carryforward, prepare only Schedule A of Form 1045.
 

Complete Ryan and Blake Lively's Form 8582 (page 1). If required, on Form 8582, use the minus sign to enter a "loss" as a negative number on the lines 1d, 3 and 11. However, per the instructions on the tax return, enter all numbers in Part II as positive amounts.

Form 8582 Department of the Treasury Internal Revenue Service (99)	Passive Activity Loss Limitations ► See separate instructions. ► Attach to Form 1040, 1040-SR, or 1041. ► Go to www.irs.gov/Form8582 for instructions and the latest information.	OMB No. 1545-1008
		2022 Attachment Sequence No. 88

Name(s) shown on return Ryan and Blake Lively

Identifying number 434-14-4448

Part I	2022 Passive Activity Loss
	Caution: Complete Parts IV and V before completing Part I.

Rental Real Estate Activities With Active Participation (For the definition of active participation, see Special Allowance for Rental Real Estate Activities in the instructions.)
1a	Activities with net income (enter the amount from Part IV, column (a)) . . . .		1a
b	Activities with net loss (enter the amount from Part IV, column (b)) . . . . . .		1b	6500	)
c	Prior years' unallowed losses (enter the amount from Part IV, column (c)) . .		1c	(	)
d	Combine lines 1a, 1b, and 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					1d	-6500
All Other Passive Activities
2a	Activities with net income (enter the amount from Part V, column (a)) . . . .		2a
b	Activities with net loss (enter the amount from Part V, column (b)) . . . . . . .		2b	(	)
c	Prior years' unallowed losses (enter the amount from Part V, column (c)) . . .		2c	(	)
d	Combine lines 2a, 2b, and 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					2d
3	Combine lines 1d and 2d. If this line is zero or more, stop here and include this form with your return; all losses are allowed, including any prior year unallowed losses entered on line 1c or 2c. Report the losses on the forms and schedules normally used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					3	-6500
	If line 3 is a loss and:	• Line 1d is a loss, go to Part II. • Line 2d is a loss (and line 1d is zero or more), skip Part II and go to line 10.
Caution: If your filing status is married filing separately and you lived with your spouse at any time during the year, do not complete Part II. Instead, go to line 10.

Part II	Special Allowance for Rental Real Estate Activities With Active Participation
	Note: Enter all numbers in Part II as positive amounts. See instructions for an example.

4	Enter the smaller of the loss on line 1d or the loss on line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				4	6500
5	Enter $150,000. If married filing separately, see instructions . . . . . . . . . .	5	150,000
6	Enter modified adjusted gross income, but not less than zero. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6	fill in the blank b80237075fa8ff8_6
	Note: If line 6 is greater than or equal to line 5, skip lines 7 and 8 and enter -0- on line 9. Otherwise, go to line 7.
7	Subtract line 6 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7	fill in the blank b80237075fa8ff8_7
8	Multiply line 7 by 50% (0.50). Do not enter more than $25,000. If married filing separately, see instructions				8	25,000
9	Enter the smaller of line 4 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				9	-6500

Part III

Total Losses Allowed

10	Add the income, if any, on lines 1a and 2a and enter the total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				10
11	Total losses allowed from all passive activities for 2022. Add lines 9 and 10. See instructions to find out how to report the losses on your tax return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				11	-6500

Part IV

Complete This Part Before Part I, Lines 1a, 1b, and 1c. See instructions.

Name of activity	Current year		Prior years	Overall gain or loss
	(a) Net income (line 1a)	(b) Net loss (line 1b)	(c) Unallowed loss (line 1c)	(d) Gain	(e) Loss
Mortgage homeRental homeVacation homeRental home		-6500			-6500
Total. Enter on Part I, lines 1a, 1b, and 1c ►		-6500

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 63704F

Form 8582 (2022)

Answer rating: 100% (QA)

Form 8582 Department of the Treasury Internal Revenue Service Passive Activity Loss Limitations For the year 2022 Attach to Form 1040 1040SR or 1041 G... View the full answer