lossespassive
Lossespassive, or passive activity losses (PALs), refer to losses generated by passive activities under U.S. federal tax rules, typically described in IRC Section 469. These losses generally cannot be deducted against wages, salaries, or other active income. Instead, PALs can offset income from other passive activities, and any excess is carried forward to future years.
Passive activities include most businesses in which the taxpayer does not materially participate and most rental
Limitations and treatment: PALs are subject to at-risk and basis limitations, which limit the amount of loss
Practical considerations: Taxpayers must track participation, basis, and at-risk amounts to determine PAL eligibility. Planning around