As a result, the taxpayers' deduction of certain suspended passive activity losses
was disallowed, and a significant portion of their refund claim was denied.
A decedent's suspended passive activity losses
are allowed on the final income tax return, subject to certain limitations.
For example, real estate professionals may be able to avoid the limit on passive activity losses
Rental activities such as rental real estate ventures generally are passive activities for the rules on passive activity losses
com)-- Finally a solution to investors that have been carrying suspended Passive Activity Losses
(PALs) on their tax return (Form 8582) every year.
usually become eligible to deduct passive activity losses
Definition of Passive Activity and Passive Activity Losses
In determining passive activity income, passive activity profits are offset by passive activity losses
The S corp may have generated passive activity losses
to the shareholder if it conducted rental activities or if the shareholder did not materially participate in the business activity of the corporation.
Passive activity losses
in excess of passive activity income are suspended.
Special topics include tax research, employment taxes, tax accounting methods, passive activity losses
, net operating losses, specially taxed corporations, taxation of securities, retirement plans, estate and gift taxation, and taxation of international transactions.
In other words, suspended passive activity losses
from the years in which the corporation was closely held will still only be able to be offset against passive activity income and net active income.