🎥+✏️Excess Business Loss Limitation 🟢

Responses

1. 

   Ureba Kiran Zeeshan 25 June 2026

   Hi, the c/f loss of 5400 and 9800 is used as NOL in next year and adjusted against taxable income and passive income and after that year Partnership sold gain occur then these losses will not be considerd as active? am I right? as it already fully set off

   1. 

      Maroun, CPA 27 June 2026

      Hi Ureba,

      The $5,400 is not an NOL. It is an at-risk suspended loss. It can be used in a later year only when the taxpayer has enough at-risk basis. After that, it still has to pass the passive loss rules.

      The $9,800 is also not an NOL. It is a passive activity loss carryforward. It can be used against future passive income.

      If those losses are fully used in a later year, then yes, they are gone. They will not be used again when the partnership is sold. There is no double deduction.

      If they were not fully used, then any remaining suspended passive losses may be released when the taxpayer sells the entire partnership interest in a taxable sale.

      Thus, your understanding is correct: if the losses were already fully set off, they will not be considered again upon sale.

      Hope this helps!

2. 

   Ureba Kiran Zeeshan 25 June 2026

   In NOL lecture professor mentioned that Rental income and expenses are business income and expenses. but here in example 2 he marked rental income as passive income. Why?

   1. 

      Maroun, CPA 29 June 2026

      Hello Ureba,

      Could you please let me know at which timestamp professor Farhat mentioned that rental income and expenses are business income and expenses in NOL lecture?

      1. 

         Ureba Kiran Zeeshan 29 June 2026

         It is 13:08

         1. 

            Maroun, CPA 1 July 2026

            Hello Ureba,

            The two lectures are using different tax classifications.

            For NOL purposes, rental income and rental expenses are generally treated as business items, not nonbusiness items like interest, dividends, or personal deductions.

            However, for passive activity loss rules, rental activity is generally treated as passive, unless an exception applies, such as the real estate professional exception.

            Therefore, there is no contradiction.
            Rental income can be:
            • Business income for NOL purposes, and
            • Passive income for passive activity loss purposes.

            The key point is: passive does not mean nonbusiness. It only means the income comes from an activity that is passive under the passive activity rules.

            Hope this makes sense!