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@moonpetty58 wrote:

I just need to understand why t/p expenses are being disallowed due to Passive Activity Limits

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Because that is how Congress wrote the law.  Passive Losses are not not allowed, unless they can offset Passive Income.

There is an exception for real estate rental (up to $25,000) if (a) the taxpayer actively participates in it *AND* (b) their Modified AGI is under $150,000.

Any disallowed losses are carried forward (see Form 8582) and can be used whenever there is passive income (or when the property is sold in a fully taxable transaction).