Once a loss becomes allowable under these other limitations, you must determine whether the loss is limited under the passive loss rules. Also, capital losses that are allowable under the passive loss rules may be limited under the capital loss limitations of section 1211. Except as otherwise indicated, the following terms in these instructions are defined as shown below. Net income means the excess of current year income over current year deductions from the activity. This includes any current year gains or losses from the disposition of assets or an interest in the activity.
Net loss means the excess of current year deductions over current year income from the activity.
This includes any current year gains or losses from the disposition of assets or an interest in the activity. Overall gain means the excess of the net income from the activity over the prior year unallowed losses from the activity. Overall loss means the excess of the prior year unallowed losses from the activity over the net income from the activity or the prior year unallowed losses from the activity plus the net loss from the activity. Any rental real estate activity in which you materially participated if you were a real estate professional for the tax year. For purposes of this rule, each interest in rental real estate is a separate activity, unless you elect to treat all interests in rental real estate as one activity.