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Instructions for Schedule F (Form 1040)
taxmap/instr/i1040sf-005.htm#en_us_publink17152rd0e518

Line E(p3)

For Use in Tax Year 2013
rule
taxmap/instr/i1040sf-005.htm#en_us_publink17152rd0e523
Material participation.(p3)
For Use in Tax Year 2013
rule
For the definition of material participation for purposes of the passive activity rules, see the instructions for Schedule C (Form 1040), line G. If you meet any of the material participation tests described in those instructions, check the Yes box.
If you are a retired or disabled farmer, you are treated as materially participating in a farming business if you materially participated 5 or more of the 8 years preceding your retirement or disability. Also, a surviving spouse is treated as materially participating in a farming activity if he or she actively manages the farm and the real property used for farming meets the estate tax rules for special valuation of farm property passed from a qualifying decedent.
Check the No box if you did not materially participate. If you checked No and you have a loss from this business, see Limit on passive losses, next. If you have a profit from this business activity but have current year losses from other passive activities or prior year unallowed passive activity losses, see the Instructions for Form 8582.
taxmap/instr/i1040sf-005.htm#en_us_publink17152rd0e566
Limit on passive losses.(p3)
For Use in Tax Year 2013
rule
If you checked the No box and you have a loss from this business, you may have to use Form 8582 to figure your allowable loss, if any, to enter on Schedule F (Form 1040), line 34. In most cases, you can deduct losses from passive activities only to the extent of income from passive activities. For details, see Pub. 925.