Final answer:
The claim regarding passive loss rules and real estate rental activities is false. Taxpayers who are real estate professionals and materially participate in their rental activities can classify these activities as non-passive, with certain conditions allowing for deductions against non-passive income.
Step-by-step explanation:
The statement that under the passive loss rules, real estate rental activities are specifically defined as passive, even if the taxpayer actively manages the property, is false. Although rental activities are generally considered passive regardless of the taxpayer's participation level, there is an exception. If a taxpayer is a real estate professional and materially participates in the rental real estate activities, then that taxpayer can classify those rental activities as non-passive. Additionally, there are special provisions allowing some taxpayers to deduct losses from rental real estate activities against non-passive income in certain circumstances, particularly if one actively participates and their modified adjusted gross income is below a specific threshold.