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Returning Member
posted Apr 14, 2023 4:58:56 PM

Net Operating Loss investments

do questions re: NOL (like "Let's Check Your NOL") only have to do with businesses and work that led to a loss? does it ever have anything to do with losses incurred from investments (like stock and bonds)? or are these two things always treated separately? 

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1 Replies
Expert Alumni
Apr 15, 2023 1:12:03 PM

Yes, NOLs are losses from active participation in a business.  Investment losses from stocks and bonds, as well as passive activity businesses, are treated as Passive Activity Losses (PALs) and have different treatments and calculations for allowable loss deductions.  You can see At-Risk vs. PAL for more information.