Passive Loss & At-Risk Rules

With the adoption of the passive loss limitation rules, taxpayers are looking to CPAs for guidance related to what deductions are allowed, disallowed, or suspended. Updating practitioners on the practical aspects of 469, this course addresses the needed skill to handle these pragmatic issues. Fundamentals are reviewed, planning opportunities are identified, and creative strategies are discussed and evaluated along with remaining traditional approaches. The goal of this instructive course is to understand and solve client problems under 469, with emphasis on tax savings ideas. Participants will learn to master the proper administration of these complex and often cumbersome provisions. ASSIGNMENT
At the start of the materials, participants should identify the following topics for study:
* Passive loss rules
* Material participation
* Activity definition
* Passive & nonpassive activities
* Passive activity loss
* Rental activities
* Recharacterization of passive income
* Passive activity credits
* Passive activity audit guide
* At-risk limits
Learning Objectives
After reading the materials, participants will be able to:
1. Identify affected taxpayers, categories of income and loss, and passive losses under 469 and necessary 469 calculation steps and specify the 469 & 1211 limits and the ordering and suspension of any disallowed losses.
2. Recognize a taxpayers material participation in an activity by:
a. Identifying the material participation tests and their application to entities such as partnerships and corporations;
b. Specifying the activity grouping rules and exempt activities;
c. Determining passive activity particularly, the treatment of rental activity as passive; and
d. Identifying nested activities.
3. Identify special passive loss rules and calculations by:
a. Determining alternating use effects on amount realized and adjusted basis and citing additional loss limitations outside of 469;
b. Recognizing requirements for the special $25,000 allowance; and
c. Specifying recharacterization rules and their purpose.
4. Recognize the passive activity audit guidelines identifying audit issues, determine the real estate rental activity credit exception, and cite the at-risk limit rules as they relate to 469.