A taxpayer dies holding an interest in a passive activity (such as a rental property, a partnership interest, or S corporation stock), and there are §469 suspended passive activity losses (PALs) attached to that activity. What happens to those losses?
The transit of the activity from the decedent to the estate to the beneficiary has three distinct considerations with how to handle PALs and current losses from the activity.
Read More: https://www.tomtalkstaxes.com/p/passive-losses-death (May 1, 2026)