All of a taxpayer's tax credits relating to a passive activity can be utilized when the activity is sold at a loss.

Question

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Tax credits related to a passive activity are generally limited to the tax liability arising from that activity. When the activity is sold at a loss, unused credits may not be fully utilized unless specific conditions are met, such as the ability to offset the loss against other passive income or the credits being of a type that can be carried over to other tax years.

All of a Taxpayer's Tax Credits Relating to a Passive