26 U.S.C. § 58 — Denial of certain losses

(a) Denial of farm loss. (1) When an individual taxpayer (not a corporation) computes alternative minimum taxable income for a year, any loss from a "tax shelter farm activity" that year is not allowed as a deduction. Instead, that disallowed loss is treated as a deduction for the activity in the next year. (2) A "tax shelter farm activity" means either a farming syndicate as defined in section 461(k), or any other farming activity that counts as a "passive activity" under section 469(c). (3) In figuring the amount of a tax shelter farm activity's loss, the adjustments required by sections 56 and 57 apply. (b) Disallowance of passive activity loss. In computing alternative minimum taxable income, the regular passive-activity-loss rule (section 469) applies, with two changes: the adjustments of sections 56 and 57 still apply, and instead of using the special housing exception in section 469(j)(7), the passive activity loss is figured without regard to "qualified housing interest" as defined in section 56(e). (c) Special rules. (1) If the taxpayer is insolvent — meaning their debts exceed the fair market value of their assets — at the end of the year, the losses affected by subsections (a) and (b) are reduced by the amount of that insolvency. (2) If the taxpayer disposes of their entire interest in a tax shelter farm activity during a year, the loss from that activity (after applying any carryover from subsection (a)(1)(B)) is allowed in full that year in computing alternative minimum taxable income, and is no longer treated as a tax shelter farm activity loss.