Passive activity loss limitation

[Bonnie]

For the first time I am doing a return with an unallowed passive activity loss because of the passive activity loss limitation for income over $100,000. Will this loss always be able to be carried forward or only as long as the rental property is on the tax return?

Thanks for the help

Bonnie

[veritas]

The loss is carried forward

until it is absorbed by passive income or the activity is completely disposed of.

[Bonnie]

until it is absorbed by passive income or the activity is completely disposed of.

Thanks, So if it is never absorbed by passive income how does it figure in when the activity is disposed of? Does it someone affect the cost basis? That doesn't seem likley.

Thanks
Bonnie

[Maribeth]

The suspended losses carryforward until the asset is disposed of. In that year of disposition, all of the suspended losses are allowed, they are not considered passive in that year. You'll also report any gain on the sale of the asset itself.

Maribeth