In the current year, Louise invests $50,000 for a 20% interest in a passive activity.Her share of the loss this year is
$10,000.If this is her only passive activity, the $10,000 loss from the activity this year is suspended for use in a future year.

Question

Quizplus · Accepted Answer

According to the IRS passive activity loss rules, if an individual has a passive activity in which they do not actively participate and they incur a loss, that loss is considered a suspended loss and cannot be used to offset income in the current year. Instead, the loss can be carried forward and used to offset income in future years from the same passive activity or be used to offset any gains from the sale of the passive activity. Therefore, Louise's $10,000 loss from the passive activity this year would be suspended for use in a future year.

In the Current Year, Louise Invests $50,000 for a 20