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. This course deals with how the passive income and loss rules create complex tax reporting, controversy, and confusion as to how various business and investment activities should be classified. The course also addresses that for clients with real estate investments, it's often difficult to sort out which losses and expenses can be used to offset income. Finally, the course discusses how the focus on 'passive' income and losses as distinguished from 'active' income and losses has intensified greatly now as the 3.8% Net Investment Income Tax (NIIT) has become effective.
Upon successful completion of this course, participants will be able to:
•Identify which activities are defined as passive and why
•Define and distinguish active and material participation
•Understand the interplay and planning impact of the 3.8% tax on net investment with the passive activity loss rules
•Determine how grouping of activities may overcome passive activity limitations
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