Passive Activities & Rental Real Estate Income Tax Issues
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Training for Business Professionals
Who Should Attend?
Tax professionals that need an in-depth training course on the passive activity loss rules and how they apply to certain investments in trades or businesses and rental activities.
Area of Study:
This comprehensive training is designed to get the accountant up to speed quickly with the complex passive activity loss (PAL) rules that apply to certain investments in trades or businesses and rental activities. The cornerstone of the course is the in-depth coverage of the detailed tax law and regulations applicable to passive activities under IRC §469 and how and when the 3.8% net investment income tax under §1411 applies.
Once participants have completed this session they should be able to:
- Identify what activities are subject to the PAL rules and the exceptions to them including those for certain real estate
- Define a passive activity, rental and trade or business under IRC §469
- List the seven ways to materially participate in an activity and the six exceptions to the definition of a rental activity
- Calculate the passive activity income and losses allowed and the tax ramifications of passive activity dispositions
- Recognize what passive activity investments are potentially subject to the 3.8% net investment income tax under IRC
Topics include but are not limited to:
- Detailed coverage of the Tax Cuts & Jobs Act (TCJA) affecting passive activities and rental real estate (i.e., new
20% qualified business income deduction (QBI))
- How the PAL rules apply to rental real estate activities and investments in S corporations and partnerships
- How the 3.8% net investment income tax under §1411 applies to passive activities
- Definition of an activity and the activity grouping and disclosure rules
- Real estate professional exception to the PAL rules for investments in non-passive rentals
- Special $25,000 loss allowance for rental real estate with active participation
- Material participation safe harbor rules
- Events that trigger suspended PALs
- Limitations on tax credits generated by passive activities
- Special rules that re-characterize passive income to non-passive income