Since the enactment of the passive activity loss limitation rules in 1986, taxpayers and practitioners have been frustrated in attempts to have economic losses incurred in activities described as 'passive' offset income derived from other sources. Join Steven Siegel as he covers this complex, controversial, and confusing topic. Learn how the passive income and loss rules affect the classification of various business and investment, and examine which losses and expenses can be used to offset income. In addition, you'll understand how 'passive' income and losses are distinguished from 'active' income and losses as the tax focus has intensified with the onset of the 3.8% net investment income tax.
Upon successful completion of this course, participants will be able to:
- Determine what constitutes a passive activity, which activities taxpayers are subject to the passive activity loss rules, and the various exceptions to the per se passive rental income rules
- Recognize the seven tests for material participation, noting what constitutes qualifying participation, the requirements for substantiating material participation, and the special rules applicable to real estate professionals
- Recognize the rules for determining passive activity income and deductions
- Identify the rules for electing to group passive activities, recognizing the impact of the disposition of interests in passive activities and the impact of the net investment income tax (NIIT) on passive activities
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