Source: https://www.cpethink.com/course/passive-activity-losses-from-a-tax-perspective
Timestamp: 2019-04-22 00:57:44+00:00

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This course, Passive Activity Losses from a Tax Perspective, addresses the practical aspects of §469 and the needed skill to handle pragmatic issues. Fundamentals are reviewed, planning opportunities identified, creative strategies discussed and evaluated along with remaining traditional approaches. The goal of this instructive program is to understand and solve problems under §469, with emphasis on tax savings ideas. During this real estate tax course, readers will overview the proper administration of this complex and often cumbersome provision.
e. Recognizing the concept of investor participation as central in determining the allowance of a passive loss.
2. Specify the mechanics of the passive loss rules, recognize the impact of §469 to appropriate deductions, identify what type of income may be offset by passive losses and then, determine a passive loss.
c. Identifying circumstances that allow for special treatment of income and loss.
4. Recognize the suspension of disallowed losses, identify ways to ultimately "free up" passive losses, specify the treatment of passive credits including potential basis adjustment, and determine a fully taxable disposition indicating the impact of related party transactions.
d. Recognizing ways to escape the application of the FTD and other passive loss rules particularly for closely held corporations and personal service corporations that change their operations and nature.
d. Citing §469’s effective date and recognizing the IRS’s application authority under 469(l).
1. Identify how to avoid the application of the passive loss rules through material participation, and factors under the TRA ’86 that were considered in determining whether the taxpayer’s involvement in the operation of the activity is regular, continuous, and substantial.
2. Specify tests provided by the initial February 19, 1988 regulations on material participation and how these tests provide useful §469 categories, determine participation and how to keep appropriate records of participation in an activity, identify exceptions to the definition of what counts toward material participation, specify the husband and wife rule associated with the passive loss rules, determine annual material participation.
c. Determining the application of the material participation rule to retired or disabled farmers under the regulations.
c. Citing Notice 88-94’s role in determining separate activities.
d. Identifying miscellaneous entity rules used for determining activities and reasonable and unreasonable methods of organizing operations.
b. Specifying rental activities, limited partnership activities, and partnership and S corporation activities according to their special rules, and citing conditions that permit a taxpayer to later regroup activities.
c. Recognizing the tax consequences of inappropriate activity grouping and conditions permitting part of an activity to be a separate activity.
e. Specifying self-charged expenses, rental and nonrental activity grouping, and divorce transaction that can trigger audits.
c. Identifying exceptions to the general rule that rental activities are presumed passive.
f. Recognizing the requirement of separate accounting for portfolio income of a passive activity from other items related to such activity and citing the basis for this rule.
d. Determining an affiliated group’s passive activity loss using specified items of each group member.
2. Specify reasons why disallowed passive activity losses must be allocated among all the taxpayer’s activities producing a loss during the tax year, determine how to allocate disallowed passive activity losses and how it may be applied to multiple activities, identify the ratable portion of a loss and the ratable portion of a passive activity deduction under §469, and recognize significant participation activities and how to determine loss, if any.
d. Citing conditions that must be met to offset up to $25,000 per year of losses and credits related to a passive activity against nonpassive income.
d. Determining the tax result of a positive §481 adjustment for an activity.
e. Specifying types of income that are deemed compensation for personal services and their effect on portfolio income.
a. Identifying a loss from an oil and gas interest that is initially treated as nonpassive and income from a property whose basis is determined by reference to such property.
d. Recognizing types of recharacterization rules, what type of conversion each prevents, and identifying whether certain transactions will be recharacterized based on the tests provided by the regulations.
1. Determine a “passive activity deduction,” how it is processed under §469, and aggregate qualified residence interest using §469(j)(7), specify passive activity deductions with other deduction limitations and identify effects the coordination rule has on the determination of passive activity deductions.
2. Recognize how to account for losses on disposition according to Reg. §1.469-2T(d)(5), and cite instances that require such a loss to be allocated, determine a negative §481 adjustment, and specify exceptions to the passive activity deduction.
1. Determine “passive activity credits” and the regular tax liability allocable to passive activities, cite the $25,000 allowance according to the regulations, identify a closely held corporation’s passive activity credit net active income for the tax year and under §469, and determine how passive activity limitations apply to credits and how to allocate disallowed credits.
2. Specify circumstances where separate identification of credits is required and the order of credit limitations, cite the special rule for partners and S corporation shareholders, determine how passive activity credits match with other limitations, and identify the tax treatment of carryover passive activity credits.
1. Identify items received from pass-through entities as passive or nonpassive according to the passive loss rules, determine a taxpayer’s participation and the application of §469 to payments to partners as outsiders and as partners, specify the tax consequences of cash payments in liquidation of a partner’s interest, and identify categories of cash payments in such a liquidation.
d. Determining the allocation of gain or loss from a disposition of an interest in a subsidiary entity and the special restriction on conversion of nonpassive income.
e. Identifying corporate tax provisions requiring coordination with §469.

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