### Question
How does the law define passive activity credit?


### Answer
Under *26 U.S.C. § 469*, **passive activity credit** is defined as:

> the amount (if any) by which—



(A) the sum of the credits from all passive activities allowable for the taxable year under—



(i) subpart D of part IV of subchapter A, or



(ii) subpart B (other than section 27(a)) of such part IV, exceeds


  


(B) the regular tax liability of the taxpayer for the taxable year allocable to all passive activities

#### Citation:
  - *26 U.S.C. § 469*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter E-Accounting Periods and Methods of Accounting > PART II-METHODS OF ACCOUNTING > Subpart C-Taxable Year for Which Deductions Taken**

