T.D. 8537 - Carryover of Passive Activity Losses and Credits and At Risk Losses to Bankruptcy Estates of Individuals

TD 8537, contains the final regulation that affect individual taxpayers who file bankruptcy petitions under chapter 7 or chapter 11 of title 11 of the United States Code and have passive activity losses and credits under section 469 or losses under section 465. Internal Revenue Code (IRC), Section 469 defines passive activity losses and the credit limits applicable to those passive activity losses. IRC Section 465 limits the losses that can be claimed for at-risk activities, and to ensure that loses claimed are valid. IRC Section 1398, provides guidance relating to the application of carryover of passive activity losses and “at risk” losses to the bankruptcy estates of individuals. The regulations were amended to designate additional attributes that pass from the debtor to the bankruptcy estate under section 1398(g) of the Internal Revenue Code and that, upon termination of the estate, pass from the bankruptcy estate to the debtor under section 1398(i).

The latest form for T.D. 8537 - Carryover of Passive Activity Losses and Credits and At Risk Losses to Bankruptcy Estates of Individuals expires 2027-09-30 and can be found here.