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Passive Loss and At-Risk Rules

Instructional MethodAdvanced PreparationProgram PrerequisitesField Of Study Interactive Self Study NONE General Understanding of Federal Income Taxation Taxes Experience LevelCourse IDCPE CreditsAuthor Basic to Intermediate DS-229 3 Danny Santucci Passive Loss & At-Risk Rules Course ...Read more
  • Description
Instructional Method Advanced Preparation Program Prerequisites Field Of Study
Interactive Self Study NONE General Understanding of Federal Income Taxation Taxes
Experience Level Course ID CPE Credits Author
Basic to Intermediate DS-229 3 Danny Santucci

Passive Loss & At-Risk Rules

Course Description: 
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.

Who Should Attend: CPAs, Enrolled Agents, Registered Tax Preparer, and all other Tax Professionals

Topics Covered:

    • 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: 

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 taxpayer’s 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 noting 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.

 


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