Passive activity losses generally are limited to the extent of passive activity income for the year. Losses in excess of this income are suspended and used in future years when there is passive income to offset it. However, when there is a complete disposition of an activity, all suspended losses are deductible, regardless of the amount of passive activity income.
A tax technique for receiving a refund of back taxes by applying a deduction or credit from a current tax year to a prior tax year. For example, a business net operating loss may be carried back for two years.