Given That Losses from Passive Activities Can Only Offset Income

question 26

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 a taxpayer may be treated as an active participant in an activity.

---

Definitions:

Senescence

Sum of the processes involving aging, decline, and eventual death of a plant or plant part.

Cytokinin

Plant hormone that promotes cell division; often works in combination with auxin during organ development in plant embryos.

Gibberellin

A group of plant hormones that stimulate stem elongation, germination, and flowering.

Ethylene

Plant hormone that causes ripening of fruit and is also involved in abscission.