For example, suppose a taxpayer claimes losses with regard to a working interest that starts to generate net income. If he transfers the interest to an S corporation in which he is a shareholder or to a partnership in which he is a limited partner, the income will continue to be nonpassive. The income from that interest may not be offset by other passive activity deductions. A for such taxable year which are attributable to such property shall be treated as credits not from a passive activity to the extent that the amount of such credits does not exceed the regular tax liability of the taxpayer for the taxable year which is allocable to such net income. OFFS That portion of an oil investment which is deductible for tax purposes.
All intangibles are deductible.
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