during 2022, hugh hughes reported the following income and loss: activity ($50,000) x activity $20,000 y both activity and activity y are passive to mr. hughes. hugh purchased activity x in 1987 and activity y in 1993. how much is the loss that mr. hughes may deduct in 2022?

Earnings from a rental property, a limited partnership, or another business in which a person is not actively engaged are considered passive income.
To ascertain whether a taxpayer has actively engaged in business, rental, or other income-producing activity, the Internal Revenue Service (IRS) has established specific guidelines for what it refers to as material participation.
A taxpayer is permitted to deduct a passive loss from passive activity income.

Profits and losses from a business in which a person is not actively engaged constitute passive income. Examples include limited partnership interests, equipment leasing, and property rental (provided that real estate isn't your line of work).

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