469(d)(1) defines the term "passive activity loss" as the amount by which the aggregate losses from all passive activities
exceed the aggregate income from all passive activities
for the year.
Tax credits attributable to passive activities
may be suspended under the passive activity credit rules.
Rentals are generally passive activities
, meaning that they are not treated as a trade or business and are not subject to self-employment taxes.
include trade or business ventures in which you do not materially participate; that is, you are not involved in the operation of the activity on a regular, continuous and substantial basis.
Typically, losses from a taxpayer's passive activities
can be deducted only to offset income from other passive activities
Generally, the passive activity provisions only have relevance when the taxpayer has a loss from one or more passive activities
Under the passive loss rule, aggregate losses from "passive" activities (see Q 7914) may generally be deducted in a year only to the extent they do not exceed aggregate income from passive activities
in that year; credits from passive activities
may be taken against tax liability allocated only to passive activities
The passive activities
and at-risk rules provide hurdles that taxpayers must overcome in order for certain losses to offset other sources of income in a given year.
Free Up Suspended Passive Activity Losses By Disposing Of Activity: Losses generated by passive activities
may only be used to offset income from passive activities
included watching television, talking on the phone, and going to church.
Section 469(c)(2) also classifies all rental activities as passive activities
, regardless of whether the taxpayer materially participates in the activity.
469-4(f), where a physician's practice group improperly attempted to divide its medical practice into active and passive activities
by setting up an X-ray facility to provide services to its patients.