Under the passive activity loss rules, losses in excess of passive activity income are not currently deductible (Code �469). Instead, they become suspended losses that are carried forward indefinitely. Suspended losses can be used to offset passive activity income in future years, They can also be used when there is a complete disposition of a passive activity.
In an attempt to maximize the use of passive losses, taxpayers have tried various arrangements to generate offsetting passive activity income. The following cases show the limitations on these efforts under the highly complex passive activity loss limitation rules.
