One of the IRS’s favorite exam topics these days involve challenging taxpayers with losses who are claiming to materially participate in an activity, perhaps doing so as a real estate professional. Unfortunately too often taxpayers are woefully unprepared to be able to defend their status. In this course we’ll look at the requirements to show material participation in an activity, as well as to obtain real estate professional status. The course will use recent cases to show where taxpayers are falling short of meeting the documentation standards in the real world.
Course ID: PAEC4
Passive Activities: Enabling Clients to Survive an IRS Challenge
- Understand the design of the passive activity provisions of the tax law Test your client’s level of participation in an activity to determine if they are materially participating Advise clients on the types of records they need to keep to be able to survive IRS challenge Recognize taxpayers who may qualify as real estate professionals, as well as those who are falling short of the requirements Help clients plan to achieve maximum tax benefits from their various activities
Activities that are covered by IRC 469 and those that are specifically excluded from such treatment
- The four passive activity tests that are meant to limit the ability to claim passive losses
- The two passive activity tests that are meant to prevent the creation of passive income generators
- The minimum record keeping the courts are requiring to defend material participation in an activity
- Requirements for a taxpayer to qualify as a real estate professional
DESIGNED FORCPAs who advise their clients regarding individual tax planning, particularly those working with clients with real estate holdings.
FIELD OF STUDY