Madrid luxury hotelsPreparing Your Tax Return(s) and InformationReturns
Reporting Business Losses
Passive Activities and At Risk Rules

Generally, you are in a passive activity if you have a trade orbusiness activity in which you do not materially participate during thetax year, or a rental activity. If you have a loss, you must determine your amount at riskin the activity.

ERROR MSGIn general, you can deduct passive activity losses only from passiveactivity income. You carry any excess loss forward to the following year or years untilused, or until deducted in the year you dispose of your entire interest in the activity ina fully taxable transaction.

Form6198 is used to figure:

• The current year profit (loss) from an at-risk activity for 1999 (Part I).
• The amount at risk for 1999 (Part II or Part III).
• The deductible loss for 1999 (Part IV).

The at-risk rules of section 465 limit the loss you can deduct tothe amount of the loss or your amount at risk, whichever is less.

For more details, see Pub.925, hôtels LiverpoolPassive Activity and At-Risk Rules.
Activities that AreNot Passive Activities
AT-Risk Limits

Note: Corporations subject to the passive activity rules must use Form 8810, Corporate Passive Activity Loss and Credit Limitations.

Important References

Publication 925Milano Hoteles                  Passive Activity and At-Risk Rules
Form 8582                         Passive Activity Loss Limitations
Instructions Form 8582
Form 6198                         At-Risk Limitations
Instructions Form 6198
Form 8810ERROR MSG                         Corporate Passive Activity Loss and Credit Limitations