Question 17 of 20. When are prior-year passive losses deductible if the interest in the activity was sold to a related party? The losses are allowed in the year the taxpayer disposes of the property. O The losses are allowed in the year the related party disposes of the entire interest in a fully-taxable disposition to an unrelated taxpayer. They are only permitted to the extent they exceed any stepped-up basis received. The losses are added to the seller's basis. Mark for follow up