Section 469 Passive Activity Loss Limitation Rules for Individual Taxpayers: Completing Form 8582

Substantiating Material Participation, Calculating Carry-Forwards, Reporting Dispositions, Qualifying as a Real Estate Professional

Recording of a 110-minute CPE webinar with Q&A


Conducted on Wednesday, August 10, 2016

Recorded event now available

or call 1-800-926-7926
Program Materials

The webinar will provide tax advisers with a thorough and practical guide to navigating the passive activity loss (PAL) limitation rules, calculating PAL amounts and carry-forwards, and reporting the losses on Form 8582. The panel will discuss the separate calculations required for the form and describe the inter-relationship between the at-risk rules and the PAL regulations, with a particular focus on real estate activities.

Description

The PAL limitations rules challenge and frustrate tax advisers—and have since their adoption. Simply put, taxpayers generally may not use losses from activities in which they are passive investors to offset ordinary income earned in an active trade or business. Whether a taxpayer’s involvement in an activity rises to the level of “active” not only confuses taxpayers and their advisers but is frequently subject to IRS examination and challenge.

Treatment of losses generated from the rental of real property is particularly complex. The regulations specifically include rental real estate within the definition of “passive activities,” yet numerous provisions provide both allowances for threshold loss amounts and differing standards as to the level of involvement and activity required of taxpayers to remove losses from these activities from PAL limitations.

Tax advisers must navigate the lengthy and challenging guidance on PALs to avoid costly mistakes. Particularly when the taxpayer has significant real estate investments, incorrectly sorting out which losses can offset ordinary income from business activities can have costly tax consequences. The IRS continues to focus on passive income and losses since the imposition of the 3.8% Net Investment Income Tax.

Listen as our experienced panel provides a thorough and practical guide to understanding the PAL rules, calculating what income and loss must be classified as passive, calculating PAL carry-forwards, reporting PAL limitations on Form 8582, and identifying planning opportunities to minimize the impact of PAL limitations.

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Outline

  1. Passive activity rules of IRC Section 469 and regulations
  2. Material participation rules
  3. Active participation for real estate
  4. Real estate professional standards
  5. Form 8582
  6. Disposition of passive activity investments

Benefits

The panel will discuss these and other important topics:

  • Activities that are primarily passive
  • Active vs. passive distinction in real estate activities
  • Material participation test
  • Real estate “active participation” test
  • Substantiating active participation under the tests

Faculty

Watson, Jason
Jason Watson, EA, MBA

Managing Partner
Watson CPA Group

Mr. Watson advises small business owners in creating a map for the future. His focus is on S corporations,...  |  Read More

Barnett, Robert
Robert S. Barnett

Partner
Capell Barnett Matalon & Schoenfeld

Mr. Barnett practice encompasses business and tax planning, estate planning and federal and state tax dispute...  |  Read More

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$147