Passive Activity Loss

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Passive Activity Loss (PAL)

A loss incurred in participating in passive investing.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

passive activity loss

The situation when expenses are greater than income from a passive activity.
The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
On July 15, 1998, however, PAL carried out the retrenchment of its more than 1,400 cabin crew
Reza Samad, President, PALS, who signed the MoU on behalf of PALS said the Aman Foundations's grant to PALS and now provision of boats and lifesaving equipment serves as a means for us to continue saving lives at sea.
On the other hand, the tensile strength of PP (Figure 6(b)) increased slightly with the addition of Pals; however, no significant differences were observed with the experimental error.
Hope and commitment contributed to the conception of PALS. The excitement and energy that gave birth to the initiative have sustained it through each phase of its evolution.
If you would like to have a pen pal, send your name, address, and age to the address below.
Therefore, the unused PALs cannot be used to reduce tax.
He could have inquired as to the status of that mortgage before he entered into his lease with the Pals. Wender never did make any inquiry of Bankers Trust regarding the mortgage and Bankers Trust never made any representations to Wender or concealed any facts from him with respect to the mortgage.
P grouped B and G together to constitute a single "activity." P netted the B income and the G loss on Schedule E, Supplemental Income and Loss, reported the net rental income as not from a passive activity and reported no PAL. However, the IRS disallowed P's net loss on the G property as a PAL, under Sec.
If the property is frequently profitable, occasional PALs are hardly a concern, as the taxpayer can carry the loss forward.
[1] If you have Internet access, go to, and click on Pen Pals. Credit card users, complete the application and pay online.
Charles Investment Co., 10th Cir, 11/14/00, a C corporation had suspended PALs from real estate during the years 1988-1990.