As you may know, the tax law provides that you may not use any passive losses to offset any nonpassive income.
There is, however, a special exception for rental real estate activities in which you actively participate. Up to $25,000 of losses from such activities may be used to offset nonpassive income. This amount is called the "special allowance".
There's also an exception for commercial revitalization deductions (CRDs) from rental real estate activities.
If you do not have any rental real estate in which you actively participate or any CRDs, you don't need Worksheet #4 at all.