Passive Activity Losses & Deduction for Qualified Business Income

Description

The course will enable participants to evaluate and correctly apply the passive loss rules and regulations, including the computation of credit limitations and suspended loss carryovers, in order to survive the increased scrutiny of the IRS.

The course will provide the practitioner with a detailed discussion and examples of the deduction for qualified business income under §199A introduced in the Tax Cuts and Jobs Act.

Objectives

• Identify taxpayers subject to the passive activity loss rules
• Define an activity, including rental activities, aggregation rules, professional services, and rental real estate activities
• Distinguish between a trade or business activity and a rental activity
• Define a passive activity, including trade or business, and long-term and short-term rental activities for both real and non-real property
• Differentiate between material and active participation, including participation by spouse, members of an LLC, shareholders of an S corporation, and limited partners
• Apply the passive loss rules to real estate professionals, incorporating the aggregation rules, and identify common filing mistakes
• Illustrate the mechanics of the passive activity loss rules
• Demonstrate allocation of passive losses and carryover of a passive activity loss
• File Form 8582
• Describe the use of passive activity credits and limits on the use of the credits
• Advise eligible taxpayers of passive activity loss tax planning opportunities, including individuals, real estate owners, real estate developers, service providers, manufacturers, and wholesalers and retailers
• Describe the qualification for the 20% deduction under §199A
• Recognize a specified service business and discuss the application of §199A for service based businesses
• Calculate Qualified Business Income (QBI)
• Describe when the rental of property is eligible for the §199A deduction
• Describe the three categories of taxable income for the deduction under §199A
• Calculate the deduction for the three categories of taxable income