# Limitations on Passive Activity Losses and Credits-Treatment of Self-Charged Items of Income and Expense
> **IRS** · Final regulations. · Published 2002-08-21 · Effective 2002-08-21 · 67 FR 54087
## Document
- **Document number:** 02-21203
- **Category:** other
- **Sub-agency:** IRS
- **Federal Register citation:** 67 FR 54087
- **CFR reference:** 26 CFR 1
- **Publication date:** 2002-08-21
- **Effective date:** 2002-08-21
- **Treasury docket:** TD 9013
## Abstract

These regulations provide guidance on the treatment of self- charged items of income and expense under section 469. The regulations recharacterize a percentage of certain portfolio income and expense as passive income and expense (self-charged items) when a taxpayer engages in a lending transaction with a partnership or an S corporation (passthrough entity) in which the taxpayer owns a direct or indirect interest and the loan proceeds are used in a passive activity. Similar rules apply to lending transactions between two identically owned passthrough entities. These final regulations affect taxpayers subject to the limitations on passive activity losses and credits.

## Source
- [Federal Register document](https://www.federalregister.gov/documents/2002/08/21/02-21203/limitations-on-passive-activity-losses-and-credits-treatment-of-self-charged-items-of-income-and)
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