Stephenson, a corporate executive, earns a salary of $500,000 per year. In addition, he owns a separate business in which he participates. The business produces a loss of $75,000 during the year. If Stephenson materially participates in the business, the $75,000 loss is an active loss that may offset his active income from his corporate employer. If he does not materially participate, the loss is passive and is suspended. Stephenson may use the suspended loss in the future only when he has passive income or disposes of the activity.