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Passive Losses

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Passive Activity Loss
A loss resulting from a passive investment. For example, rental income is considered passive; if a tenant does not pay his/her rent, this may be considered a passive income loss. Passive income losses may only offset passive income gains; they may not offset earned income. Furthermore, passive income loss may not be carried back; it may only be carried forward.

Passive losses. You have passive losses from businesses in which you aren't an active participant. These include limited partnerships, such as real estate limited partnerships, and other types of activities that you don't help manage.

You can deduct losses from passive investments against income you earn on similar ventures. For example, you can use your losses from rental real estate to reduce gains from other limited partnerships.

Or you can deduct those losses from any profits you realize from selling a passive investment. However, you can't use passive losses to offset earned income, income from your actively managed businesses, or investment income.
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Investors will derive a return based primarily on the receipt of Low Income Housing Tax Credits and passive losses from real estate depreciation.
PNC completes one of year's biggest funds by Real Estate Weekly
Passive losses disallowed in one year generally may be carried over to the next year.
Passive activity rules not presumed to apply to LLCs and LLPs by Valdez, Veronica / The Tax Adviser
The Court of Federal Claims denied a taxpayer's claim that the terms of his partner's closing agreements with the government allowed him to use previously disallowed passive losses to offset nonpassive income.
Partners' agreement subject to at-risk rules by Schnee, Edward J. / Journal of Accountancy
 
 
 
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