Generally, when a taxpayer disposes of their entire interest in a passive activity where all gain or loss is recognized, any prior year unallowed passive activity losses are:

  
When a taxpayer disposes of the entire interest in a passive activity, that activity is no longer subject to the passive activity rules. If the activity is disposed of in a fully taxable (as opposed to tax-deferred) transaction to an unrelated party, both current and suspended passive activity losses generated by that activity (as well as any loss on the disposition) can be deducted.

Typically, los inflation is a sign of a healthy economy because it results from a steady rise in demand.