Leveraging IRC 469 Real Estate Professional Rules for Individual Taxpayers: Avoiding Passive Loss Limitations

Identifying and Grouping Real Estate Rental Activities, Meeting Material Participation Thresholds

A live 110-minute CPE webinar with interactive Q&A


Wednesday, September 6, 2017
1:00pm-2:50pm EDT, 10:00am-11:50am PDT


This webinar will provide tax advisers with a thorough and practical guide to navigating the real estate professional rules of IRC 469(c)(7). The panel will discuss the general passive loss limitation rules and exceptions for real estate activities, and will detail the material participation standards, grouping rules, and quantitative tests under Section 469(c)(7)(B). The webinar will also provide useful guidance on available aggregation elections to avoid passive loss limitations.

Description

An often crucial aspect of tax planning for individuals with rental real estate is whether their rental activities meet the threshold by which the taxpayer can be classified as a “real estate professional” under the rules of IRC 469. For many individual taxpayers, having rental activities qualify for real estate professional designation can result in significant income tax savings through avoidance of passive loss limitations.

Real estate rental activities often create tax losses through depreciation while generating positive cash flow. However, the default tax treatment for real property rental income or loss is passive, and rental losses cannot be applied to offset nonpassive income. Rental activity deemed passive is subject to the net investment income tax (NIIT) for income amounts over the specified threshold.

Treasury has established several safe harbors for individual taxpayers to meet in avoiding passive treatment on rental income and loss. Although the safe harbors set forth bright-line tests, the determination of whether a taxpayer meets the threshold to quality as a real estate professional is a challenge for most tax advisers.

The existing regulations require that a taxpayer prove qualification as a real estate professional by identifying and grouping real estate rental activities and then by meeting the material participation thresholds for each activity or grouping.

The regulations provide seven tests to determine material participation. Tax advisers must thoroughly understand each of these tests to determine whether their client’s rental activity may qualify for real estate professional treatment.

Listen as our experienced panel provides a thorough and practical guide to the real estate professional rules for individual taxpayers with rental real estate activities.

Outline

  1. Default passive income loss limitation rules under Section 469
  2. When an individual taxpayer would want to be classified as a real estate professional
  3. Determining whether a taxpayer is a “real estate professional”
  4. Material participation tests
  5. Section 1.469-9 grouping/aggregation election
  6. Documentation requirements
  7. Illustrations and examples

Benefits

The panel will discuss these and other important questions:

  • The default passive loss treatment for real estate income
  • Grouping real estate rental activities
  • Applying the material participation tests to individual or grouped real estate activities
  • How the Sec. 1.469-9 aggregation election functions

Learning Objectives

After completing this course, you will be able to:

  • Discern when an individual taxpayer would derive tax benefit from designation as a real estate professional
  • Identify the safe harbor provisions for real estate professional status
  • Recognize the requirements for real estate professional designation
  • Determine whether a client’s activities meet the regulatory threshold for real estate professional status

Faculty

Brian T. Lovett, CPA, JD, Partner
WithumSmith+Brown, New Brunswick, N.J.

Mr. Lovett has extensive experience serving the tax needs of both public companies and closely-held businesses, including all aspects of tax compliance for partnerships and corporations. He advises clients with regard to the structure and tax consequences of new business ventures, and assists with restructuring existing businesses for increased tax efficiency. Prior to joining his firm, he was with a “Big 4” accounting firm, working closely with large, multinational real estate investment companies.

Scott Bartolf, CPA, Senior Tax Manager
WithumSmith+Brown, Red Bank, N.J.

Mr. Bartolf has diversified public accounting experience focusing on individual, partnership, corporate and trust / estate taxation. His experience includes tax compliance, planning and representation of clients in many industries including the real estate, consumer products and technology industries.

John H. Skarbnik, Professor of Taxation, Fairleigh Dickinson University; Tax Counsel
McCusker Anselmi Rosen & Carvelli, Florham Park, N.J.

Mr. Skarbnik is full professor in the University’s Masters in Taxation Program. In his law practice, he concentrates on corporate, shareholder, tax, and trusts and estates law and brings additional expertise as a certified public accountant. He handles estate planning, estate administration, business structuring, business purchases and sales, and other issues involving individual and corporate taxation, and estate and gift taxation. He also advises clients on the formation of limited liability companies, corporations, partnerships, and Subchapter S and C corporations, among other entities, across a wide range of industries and professions. He often gives presentations before tax professionals and also writes frequently in legal and tax publications.


Registration per Person for Live Event

Additional lines for this conference can be purchased at 25% off. For orders of five or more lines, further discounts will apply and will be automatically reflected in the cart.

Live Webinar $147.00

Live Webinar & CPE Processing $182.00


CPE per Person on Live Event

Continuing Professional Education credit processing is available for an additional fee. CPE processing must be ordered prior to the event. To qualify for CPE you may not listen via the telephone.

This program is eligible for 2.0 CPE credits.

  • Field of Study: Taxes.
  • Level of Knowledge: Intermediate.
  • Advance Preparation: None.
  • Teaching Method: Seminar/Lecture.
  • Delivery Method: Group-Internet (via computer).
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of verification codes announced throughout the presentation.
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. The webinar assumes specific knowledge and understanding of the Section 469 Passive Activity Rules, the material participation rules, and familiarity with the Net Investment Income Tax (NIIT); general familiarity with the qualitative tests for determining whether a taxpayer qualifies as a real estate professional

NOTE: CPE credit processing for all attendees must be ordered by 2pm Eastern the day of the program to receive a Certificate of Attendance within 24 hours.


Recordings

Recorded Event

Includes full event recording plus handouts (available after live webinar).

Note: Self-study CPE and EA credits are not offered on recorded events.

Recorded Webinar Download $147.00
Available 48 hours after the live event

How does this work?

Recorded Audio Download (MP3) $147.00
Available 24 hours after the live event

How does this work?

DVD (Slide Presentation with Audio) $147.00 plus $9.45 S&H
Available ten business days after the live event

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Registration Plus Recorded Event

Best value!

Live Webinar & Webinar Download $194.00

Recorded Webinar Download Only $47.00 with Registration/Webinar Combo

Live Webinar & Audio Download $194.00

Recorded Audio Download (MP3) Only $47.00 with Registration/MP3 Combo

Live Webinar & DVD $194.00 plus $9.45 S&H

DVD (Slide Presentation with Audio) Only $47.00 with Registration/DVD Combo


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Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

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Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

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EA Credit

Strafford is an IRS approved continuing education provider and this course is approved for 2 enrolled agent (EA) credit hours.

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Customer Reviews

I appreciated the flow of the information offered and the ease at which I could follow the handouts.

Larry Bruck

WISS & Company

I purchased the conference a few minutes after it began and the customer service rep was very helpful and got me signed up and logged into the conference very quickly.

Joanna Johnston

Savas Greene & Company

I loved the tools and handouts. Every CPE class should offer these kind of tools.

Jackie Meyer

Sample and Bailey

I liked the fact that there was more than one person presenting the material. It's nice to hear multiple perspectives.

Matt Bristow

Cover & Rossiter

The conference was technical, informative and presented at a good pace.

Krystal Ching

KMH

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