(d) The requirement is to determine the correct statement
regarding an individual taxpayer’s passive losses relating to
rental real estate activities that cannot be currently deducted.
Generally, losses from passive activities can only be used to offset
income from passive activities. If there is insufficient passive
activity income to absorb passive activity losses, the unused
losses are carried forward indefinitely or until the property is
disposed of in a taxable transaction. Answers (a) and (c) are
incorrect because unused passive losses are never carried back to
prior taxable years. Answer (b) is incorrect because there is no
maximum carryforward period.