Do depreciation losses carry forward? Active losses?

Yes, but the answer depends on the type of loss and the taxpayer’s status.

Short answer

Depreciation-related deductions generally are taken in the year allowed under the applicable depreciation provision; unused depreciation deductions do not usually “carry forward” as a separate category, but the tax attributes they create can affect later years through net operating losses. 26 U.S.C. § 461 [2]
Passive activity losses can carry forward, subject to the passive activity loss rules. 26 U.S.C. § 469 [3]

How it works

1. Depreciation losses

“Depreciation loss” is not really a single statutory bucket. Depreciation is a deduction for wear and tear over time, and the deduction is generally taken in the proper taxable year under the taxpayer’s accounting method. 26 U.S.C. § 461 [2]

If depreciation deductions exceed income in a year, the excess may contribute to a net operating loss (NOL). NOL carryforwards are governed by 26 U.S.C. § 172 [1]. For most post-2017 NOLs, the loss carries forward only, and the deduction is generally limited to 80% of taxable income. 26 U.S.C. § 172 [1]

2. “Active losses”

If by “active losses” you mean losses from an active trade or business, those losses are generally currently deductible, but they can be limited by the excess business loss rules for noncorporate taxpayers. Disallowed excess business losses are treated as NOLs for later years. 26 U.S.C. § 461 [2]

If you mean losses from a business in which the taxpayer materially participates, those are generally not subject to the passive activity loss limitation in 26 U.S.C. § 469 [3]. By contrast, passive activity losses are disallowed in the current year and carried forward to the next taxable year. 26 U.S.C. § 469 [3]

Bottom line table

If you want, I can also give you a one-paragraph answer specifically for a Schedule C sole proprietor, rental real estate, or partnership/S corporation loss.