@Csvirk Funny I almost posted that Lane passive activity question 4 hours ago – it's a repeat offender – meaning it's posted all over the place on different boards.
Gleims explanation was good, but now I can't find it. The short of it is if your income is over 150,000 your outta luck as far as deducting any passive activity loss from real estate in which you material participate against ordinary (not passive) income.
If you make 100K and under it's 25K against ordinary income. 100-150K it's one of those maddening phase outs.
I don't know what's with all the hoop jumping math in the answer explanations, the minute you see over $150K you know passive losses can only be deducted against passive income and the rest has to be carried over.