Passive loss rules and the related provisions can be complex and often cumbersome. This course addresses the practical aspects of §469 and then helps you gain skills you need to handle pragmatic issues. The course also identifies planning opportunities, discusses creative strategies, and evaluates these strategies alongside traditional approaches. You will be able to understand and solve problems under §469 and come away with new tax savings ideas.
Key topics covered include:
- General rules for material participation
- Changes in temporary activity regulations
- Passive activity auditing
- Passive and nonpassive activities
- Carryover of disallowed losses
- Passive activity credits and deductions
- Items received from pass-through entities
- Interaction with other code sections
Upon successful completion of this course, participants will be able to:
- Identify the broad impact of the §469 limitation provision.
- Identify what type of income may be offset by passive losses.
- Recognize circumstances that allow for special treatment of income and loss.
- Cite the impact and tax consequences of a fully taxable disposition (FTD).
- Specify when clients are subject to the passive loss rules.
- Identify the six 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.
- Recognize the seven tests provided by the initial February 19, 1988 regulations on material participation.
- Identify special applications of the material participation rule.
- Identify why it is operationally important to separate activities.
- Define aggregate, integrated, and professional service undertakings.
- Cite two miscellaneous entity rules used for determining activities pointing out reasonable and unreasonable methods of organizing operations.
- Recognize the temporary and final simplified activity regulations and their key elements.
- Identify indicators of significant participation activities, misstatements of active management, and net lease arrangements.
- Identify the differences between passive activities from nonpassive activities under §469.
- Cite six exceptions to the general rule that rental activities are presumed passive.
- Name two exceptions to passive activity status and their tax effect.
- Recognize three forms of entities in which a taxpayer can hold an interest that are not deemed to properly limit the taxpayer's liability when determining whether the activity is passive or nonpassive.
- Different between limited liability and loss protection.
- Recognize the tax treatment of a passive loss.
- Define a passive activity loss.
- Identify the appropriate passive loss tax treatment of spouses and working interests in oil or gas.
- Cite three reasons why disallowed passive activity losses must be allocated among all the taxpayer's activities producing a loss during the tax year.
- Calculate the ratable portion of a loss and the ratable portion of a passive activity deduction under §469.
- Identify passive activity gross income.
- Define passive activity gross income under §469.
- Cite five 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.
- Recognize the differences between active participation and material participation.
- Identify the differences between activity treatment of a real estate dealer and a lessor of property.
- Cite seven types of portfolio income that are not included in passive activity gross income.
- Define 'publicly traded partnership' for taxation purposes.
- Cite six safe harbors to be addressed in future regulations.
- Identify four additional miscellaneous exclusions from passive activity gross income.
- Cite seven types of income that are considered gross income derived in the ordinary course of a trade or business.
- Recognize aggregate qualified residence interest using §469(j)(7).
- Identify two important effects the coordination rule has on the determination of passive activity deductions.
- Cite ten exceptions to the passive activity deduction.
- Calculate a closely held corporation's passive activity credit net active income for the tax year.
- List at least three circumstances where separate identification of credits is required.
- Recognize items received from pass-through entities as passive or nonpassive according to the passive loss rules.
- Identify the tax consequences of cash payments in liquidation of a partner's interest.
- Specify gain or loss from a sale or exchange of a partnership interest.
- Identify the treatment of portfolio assets owned by pass-through entities.
- Identify the application and ordering interaction of §469 with other Code sections.
- Recognize whether or when net passive losses from an activity are deductible against other sources of income, reduce a taxpayer's at-risk amount, or impact attributable interest deductions.
- Identify corporate tax provisions requiring coordination with §469.
Choose Your Preferred Format
Get immediate access to a robust collection of learning and reference materials, allowing you to dive deep into the information you need. Our self-study materials are authored by top-quality, industry experts who focus on helping you grasp concepts quickly using real-life examples. Download your CPE to any device, and take it with you so you can learn when and wherever you want. Complete your CPE with an online exam, and enjoy instant grading with the option to print your certificate immediately upon passing.
Our self-study materials are authored by top-quality, industry experts. You’ll receive a bound notebook of all the course materials, shipped to you within one business day. In addition, you’ll also have full online access. Each self-study package includes a robust collection of learning and reference materials to help you cover the information efficiently and put it into practice immediately.
Experience high-quality instruction with our Self-Study Videos, available to you 24/7. With more than 80+ videos currently in the Western CPE Self-Study Video library, you can see and hear our expert instructors deliver the information you need in a dynamic way that allows you to immediately apply your learning. Unlike a live course or webcast, you can complete the course on your own time, playing and pausing as needed. Self-Study Videos allow you to complete your CPE requirements on your own time.
Back to top