### Question
How does the law define excess business loss?


### Answer
Under *26 U.S.C. § 461*, **excess business loss** is defined as:

> the excess (if any) of—


(i) the aggregate deductions of the taxpayer for the taxable year which are attributable to trades or businesses of such taxpayer (determined without regard to whether or not such deductions are disallowed for such taxable year under paragraph (1)), over


(ii) the sum of—


(I) the aggregate gross income or gain of such taxpayer for the taxable year which is attributable to such trades or businesses, plus


(II) $250,000 (200 percent of such amount in the case of a joint return)

#### Citation:
  - *26 U.S.C. § 461*
  - 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**

