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Question
If my wife materially participates in an activity and has active losses, can I use that active loss to offset my ordinary income?
AI accountant’s answer:
Yes, if your wife materially participates in an activity and has active losses, and you file a joint tax return, you can generally use her active losses to offset your combined ordinary income. Material participation means your wife is significantly involved in the operations of the activity, and the losses are considered non-passive. When you file a joint tax return, your incomes, deductions, and credits are combined, which allows you to use her active losses against your joint ordinary income. However, keep in mind that there may be limitations on how much loss you can offset depending on the specific circumstances and tax laws applicable to your situation.
Comment from reviewer
Judah Broussard, EA, JD
Not Correct.
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