Given That Losses from Passive Activities Can Only Offset Income

question 52

Essay

Given that losses from passive activities can only offset income from passive activities unless the passive activity is sold, what types of activities are not considered to be passive? Name at least three ways (tests) a taxpayer may be treated as an active participant in an activity.

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Definitions:

Breath Sounds

The sounds made by air as it moves through the respiratory system, which are auscultated with a stethoscope by a healthcare provider during a physical examination.

ECG

Electrocardiogram, a test that measures the electrical activity of the heart to identify various heart conditions.

Electrical Activity

The movement of electrically charged particles, such as ions, which is fundamental to many biological processes, including nerve conduction and muscle contraction.

Heart

A muscular organ responsible for pumping blood through the circulatory system.