What is a Passive Loss while filing tax returns?
I don’t know about India, but for US – a passive loss is a loss on your investments that you SOLD. For instance – if you sold stock during the year that cost you $5000 and you sold for $1000, you would have a passive loss of $4,000, However, passive loss on stock sales are generally limited to $3,000. Another passive loss may occur if you passively involved in a business and received a K-1 from that and it had a loss. This should be marked on the K-1 – is it is passive. Most business activity is active.
