Unallowed Business Loss After Termination of Company?

[msindc1]

Friends:

In 2024 Client incurred $25,000 in expenses for a rental property but had zero rental income, creating an unallowed income loss of $25,000.  Unfortunately, she sold the property in 2024, so there is no future income against which to apply the unallowed income loss.  I understand that there are ways that unallowed losses can be used.  Can anyone help me understand those possibilities?

For what its worth, she had a $40,000 capital gain on the sale (though she had to bring money to the table because she had taken out equity).

Thanks.

Micah

[Accountant-Man]

Research "disallowed passive losses" and "sale of passive activity" before you hire a tax advisor.

[TaxGuyBill]

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@msindc1 wrote:

she had a $40,000 capital gain on the sale

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She had $40,000 of income from the rental.  Passive losses can be used for that amount.

If it was sold in a "fully taxable transaction", all passive losses from the property are usable.