If a loss is disallowed under passive loss rules,the loss is:
A)Lost forever.
B)Carried over indefinitely and deductible when passive income is generated.
C)Carried over indefinitely and deductible when the activity is disposed of.
D)Both carried over indefinitely and deductible when passive income is generated and carried over indefinitely and deductible when the activity is disposed of.

Question

Quizplus · Accepted Answer

Under passive loss rules, disallowed losses are not lost forever. Instead, they are carried over indefinitely and can be deducted in future years when the taxpayer generates passive income or when the passive activity is fully disposed of. This means both conditions B and C are correct, making D the correct choice.

If a Loss Is Disallowed Under Passive Loss Rules,the Loss