Rental real estate activities and $25,000 special allowance on Form 8582

If your client actively participates in a passive rental real estate activity, then you may be able to deduct up to $25,000 of the loss from nonpassive income.
The application limits losses on Form 8582 in accordance with the special $25,000 allowance rules if the property wasn't disposed.
In a complete disposition, IRC Section 469 (g) (1) states:
note
When a taxpayer disposes of the entire interest in a passive activity, both current and suspended losses generated by that activity (as well as any loss on the disposition) become fully deductible.

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