Passive Activity Losses (PAL): Comprehensive
Passive activity loss (PAL) rules have never been more important in federal tax reporting. This course provides a comprehensive and complete review of the laws and regulations impacting PALs including the rules governing rental real estate, grouping and the 3.8% net investment income tax. The IRS is actively auditing the failure to properly report passive losses, you and your clients can’t afford to be left behind.
- How the PAL rules apply to rental real estate activities and investments in S corporations and partnerships.
- 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.
- Identify activities subject to the PAL rules and the exceptions to them, including those for certain real estate professionals.
- Define a passive activity, rental and trade or business under IRC Sec. 469.
- Outline seven ways to materially participate in an activity and 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 Sec. 1411.
Applicable if you are a HSCPA member in good standing.
Applicable if you are not a HSCPA member.