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Given That Losses from Passive Activities Can Only Offset Income

question 93

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.


Definitions:

Survivor Benefits

Financial benefits usually provided by government or private pension plans to the dependents of a deceased individual who qualified for the benefits.

Unemployment Compensation

Financial payments made to individuals who have lost their jobs, intended to provide temporary financial support.

Food Stamps

A government-issued voucher used by recipients to purchase food as part of the Supplemental Nutrition Assistance Program (SNAP), designed to assist low-income families and individuals.

Retirement Benefits

Financial support or services provided to individuals upon retirement, including pensions, social security, and health care benefits, aimed at ensuring financial security in old age.

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