I have a K-1 from a Restaurant I invested and I do not participate in management of the business.
It reported loses of $7K this year (and the prior year -$4K).
the fact you do not participate makes the loss passive. since it is not rental real estate, the passive loss is disallowed in its entirety. you do get a carryforward for the loss. it will continue to be non-deductible until there is income to offset it or you dispose of the activity. refer to form 8582
