What happens if you're the owner of a limited liability company (LLC) that generates tax losses, and you don't spend a lot of time in the activities of the business? The losses might be classified as passive, and your ability to currently deduct them might be severely restricted by the passive activity loss (PAL) rules. A number of court decisions make it easier for LLC owners to escape the passive activity rules and deduct their losses. This is good news for owners because in the past, the IRS had been known to make these owners pass stringent tests that were hard to meet. Keep reading and find out what has changed.