Passive Activity Losses definition
Passive Activity Losses. A Unit holder who sells all of the Unit holder’s Units would be able to deduct “suspended” passive activity losses from the Company, if any, in the year of sale free of the passive activity loss limitation. As a partner of the Company, which was engaged in real estate activities, the ability of a Unit holder, who or which is subject to the passive activity loss rules, to claim tax losses from the Company was limited. Upon sale of all of the Unit holder’s Units, such Unit holder would be able to use any “suspended” passive activity losses first against gain, if any, on sale of the Unit holder’s Units and then against income from any other source.