Active Losses, Passive Income

[maizefolk]

Hi All. Googling turns up an incredible amount of discussion about the opposite case (that fact that you cannot use passive losses to offset active income)

But suppose I have active losses in excess of my active income, can the active losses offset my passive income? I cannot come up with a way to search for this question on google that doesn't just turn up loads and loads of discussion about the opposite case.

[Lives to travel]

Are you in a situation where you could make use of carry forward losses?  In other words, carry the excess loss forward to be applied against next year's income?

[SeattleCPA]

You're using the wrong search term. What you're referring to is a "net operating loss."

Here's a write-up I did when people were trying to understand Trump's net operating loss:

http://evergreensmallbusiness.com/donald-trumps-net-operating-loss-deduction/

BTW, an active business producing a loss may create a passive loss for you an investor. You need to materially participate in the active business in order to not have your loss considered passive.

Tip: You can also google on Sec. 469.

[maizefolk]

Thanks! Yes, having the right google search terms helps a lot (and so does the blog post, thanks @SeattleCPA).