J.K. Lasser's Your Income Tax 2023, 2nd Edition

CHAPTER 10Loss Restrictions: Passive Activities and At‐Risk Limits

10.1	Rental Activities Generally Treated as Passive	285
10.2	Rental Real Estate Loss Allowance of up to $25,000	287
10.3	Real Estate Professionals	290
10.4	Business Participation May Avoid Passive Loss Restrictions	292
10.5	Classifying Business Activities as One or Several	293
10.6	Material Participation in a Business	294
10.7	Tax Credits of Passive Activities Limited	297
10.8	Determining Passive or Nonpassive Income and Loss	297
10.9	Passive Income Recharacterized as Nonpassive Income	299
10.10	Working Interests in Oil and Gas Wells	301
10.11	Partners and Members of LLCs and LLPs	302
10.12	Form 8582 and Other Tax Forms	303
10.13	Suspended Losses Allowed on Disposition of Your Interest	304
10.14	Suspended Tax Credits	306
10.15	Personal Service and Closely Held Corporations	306
10.16	Sales of Property and Passive Activity Interests	308
10.17	At‐Risk Limits	309
10.18	What Is At Risk?	310
10.19	Amounts Not At Risk	311
10.20	At‐Risk Investment in Several Activities	312
10.21	Carryover of Disallowed Losses	312
10.22	Recapture of Losses Where At Risk Is Less Than Zero	313

The passive activity laws were intended to discourage tax‐shelter investments, but their reach goes beyond tax shelters to cover all real estate investors and persons who invest in businesses as “silent partners” or who are not involved full time in the business. The passive activity rules prevent ...