Fully taxable transaction
(A) In general
(A)In general#
If all gain or loss realized on such disposition is recognized, the excess of—
(i) any loss from such activity for such taxable year (determined after the application of subsection (b)), over
(ii) any net income or gain for such taxable year from all other passive activities (determined after the application of subsection (b)),
shall be treated as a loss which is not from a passive activity.
(A)(i)#
any loss from such activity for such taxable year (determined after the application of subsection (b)), over
(A)(ii)#
any net income or gain for such taxable year from all other passive activities (determined after the application of subsection (b)),
(B)Subparagraph (A) not to apply to disposition involving related party#
If the taxpayer and the person acquiring the interest bear a relationship to each other described in section 267(b) or section 707(b)(1), then subparagraph (A) shall not apply to any loss of the taxpayer until the taxable year in which such interest is acquired (in a transaction described in subparagraph (A)) by another person who does not bear such a relationship to the taxpayer.
(C)Income from prior years#
To the extent provided in regulations, income or gain from the activity for preceding taxable years shall be taken into account under subparagraph (A)(ii) for the taxable year to the extent necessary to prevent the avoidance of this section.