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Income Tax Planning
Chapter 14: Passive Activity Rules/PASSIVE ACTIVITY LOSS RULES
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Chapter 14: Passive Activity Rules

PASSIVE ACTIVITY LOSS RULES

01.Core Concepts

• Losses falling into the passive bucket can only be offset by gains in the same bucket. • Excess losses can be carried forward indefinitely. • Losses can be accelerated by: • Disposing of the activity generating the losses. The loss will offset (in the specified order):  Gain on disposition of the interest  Net income from passive activities  Active and portfolio income