### Question
How is the term passive activity credit defined?


### Answer
The term **passive activity credit** is defined in *26 U.S.C. § 469* as the following:

> 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) 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**

