NOLs are different than passive losses. The key to determining when you have a net operating loss is that the loss must be from “operating,” i.e., from “active” sources of income or deductions as opposed to “passive” ones or from personal expenses. Since most passive activities and investment losses have their own different carryover rules, they are not included in the NOL calculation. Passive losses which cannot be used during the year become suspended passive losses, and those losses cannot be included in the NOL.
