If someone is in a position where they are carrying on a business, if they are already flipping properties, then, under general principles, they would be able to deduct their loss. This rule is really intended to address the concern that when people realized a gain they would take the position that they were not flipping properties and would not pay tax on their gain. This rule is really sort of an anti-avoidance rule in some ways to address that situation. It's not intended to allow someone to benefit by claiming a loss.
On November 21st, 2022. See this statement in context.