Passive Loss and

At-Risk Rules

Course Description:

With the adoption of the passive loss limitation rules, taxpayers are looking to CPAs for guidance related to what deductions are allowed, disallowed, or suspended. Updating practitioners on the practical aspects of §469, this course addresses the needed skill to handle these pragmatic issues. Fundamentals are reviewed, planning opportunities are identified, and creative strategies are discussed and evaluated along with remaining traditional approaches. The goal of this instructive course is to understand and solve client problems under §469, with emphasis on tax savings ideas. Participants will learn to master the proper administration of these complex and often cumbersome provisions.

Learning Objectives:

Upon successful completion of this course, participants will be able to:

• Identify affected taxpayers, categories of income and loss, the impact of gifting passive property, and the ordering of passive losses under §469.
• Recognize a taxpayer’s material participation in an activity by:
  a. Identifying the material participation tests and their application to entities such as partnerships and corporations;
  b. Specifying the activity grouping rules and exempt activities;
  c. Determining passive activity, particularly the treatment of rental activity as passive; and
  d. Identifying “nested” activities.
• Identify special passive loss rules and calculations by:
  a. Determining alternating use effects on amount realized and adjusted basis and citing additional loss limitations outside of §469; and
  b. Recognizing requirements for active business recharacterization (12-month test).
• Recognize the passive activity audit guidelines identifying audit issues, determine the real estate rental activity credit exception, and cite the at-risk limit rules as they relate to §469.