Thanks, Phoebe!  I tried to determine what IL law is regarding passive losses but the only guidance I can find is “You should follow the federal law concerning passive activity income and losses. You are not allowed to refigure your federal passive activity losses.”  This actually makes little sense when the state decouples from bonus depreciation since there could be passive income on the state level while a passive loss on the federal level which is what happened in my case.  Additionally, I would be interested in finding guidance on how to apply the passive loss rules to the states which follow the federal.  Often the state and federal passive losses are very different.  Are you supposed to track the state losses uses the same percentages as the federal allowance/disallowance?  Are you supposed to carryforward how much of the state passive loss is still unused each year?  How would that be accomplished in practice?