Definitions

Except as otherwise indicated, the following terms in these instructions are defined as shown below.

Net income. This is the excess of current year income over current year deductions from the activity. This includes any current year gains or losses from the disposition of assets or an interest in the activity.

Net loss. This is the excess of current year deductions over current year income from the activity. This includes any current year gains or losses from the disposition of assets or an interest in the activity.

Overall gain. This is the excess of the “net income” from the activity over the prior-year unallowed losses from the activity.

Overall loss. This is (a) the excess of the prior-year unallowed losses from the activity over the “net income” from the activity, or (b) the prior-year unallowed losses from the activity plus the “net loss” from the activity.

Prior-year unallowed losses. These are the losses from an activity that were disallowed under the PAL limitations in a prior year and carried forward to the tax year under section 469(b). See Regulations section 1.469-1(f)(4) and Pub. 925.