When you invest in Craft Pod, the IRS generally considers your income and losses from it passive under Section 469 (because you’re not actively running the business).
What is passive income?
The IRS defines a passive activity as any business where you don’t materially participate. There are seven tests for what counts as “material participation,” but if you’re just an investor and not actively managing, it’s passive.
How is Craft Pod income is classified?
For most investors, Craft Pod is passive. Any profits, losses, or bonus depreciation from the Pod will appear on your annual tax statement as passive items.
How do passive losses work?
Passive losses can:
Offset passive income from other investments
Offset suspended passive losses carried forward from prior years
But passive losses cannot reduce your salary, active business income, or portfolio interest/dividends.
If you don’t have enough passive income to use all your losses now, they carry forward and can be applied later — usually when you redeem or sell your Craft Pod interest.
Common examples of passive income
You can use these to absorb Craft Pod’s losses:
Rent from real estate you own but don’t manage day‑to‑day
Cash distributions from a limited partnership
Royalties from a book, song, or movie (if you’re not actively promoting it)
Lease payments from equipment you own but someone else operates
Any of these can absorb depreciation or other losses that flow through from Craft Pod.
Please read our full disclosures before making an investment decision.