How long can passive activity losses be carried forward for tax purposes?

Passive activity losses can be carried forward until they are utilized to offset passive income or are recognized when the investment is sold. This means that as long as there are no passive income gains or the property is not disposed of, the losses can be carried forward indefinitely until they can be entered against future income. The idea is to allow taxpayers to take advantage of these losses when their passive income situation changes, ensuring that they are not permanently unable to benefit from losses incurred in passive activities. Understanding this concept is crucial for strategic tax planning, particularly for those engaged in real estate or other passive investments.