Passive Activity Loss and At-Risk Limitations – 2017 Law – Course Manual Only
A passive activity as a business activity in which a taxpayer is deemed not to actively participate. Losses sustained in the operation of a passive activity may be limited. Losses sustained in a business activity are also subjected to at-risk rules limitations.
- Determining the amount you have at-risk in an activity
- Items that increase or decrease the amount you have at-risk
- Form 6198 At-Risk Limitations
- Purpose and scope of passive activity rules
- Definition of passive vs. nonpassive income
- How passive activity loss limitations work
- Exception for active participation in rental real estate activities
- Exception for real estate professionals
- Material participation defined
- Preparation of Schedule E, Page 2
- Preparation of Form 8582 Passive Activity Loss Limitations
- Grouping activities
- Sale of a passive activity
- Dispositions other than by sale
- Passive activity credits
- Publicly traded partnerships (PTPs)
- Activities that are not passive activities
- Rental income reportable as self-employment
- Farm rental income
By the conclusion of this course you should be able to:
- Report income and loss amounts from Schedule K-1 on Schedule E Page 2
- Explain how at-risk rules can limit your ability to claim losses sustained from an activity
- Complete Form 6198 At Risk Limits
- Differentiate between a passive and nonpassive activity
- Explain how passive activity loss rules apply to income and losses from rental property and other passive activities
- Compute the amount of allowed loss on disposition of part or all of a passive activity
- Complete Form 8582 Passive Activity Loss Limitations
- Explain the passive loss rules that apply to active participation in a rental activity
- Describe special rules which apply to real estate professionals
- Describe how grouping of activities may affect income reporting for passive and nonpassive activities
- Explain when to report farm rental income on Form 4835
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Basic tax knowledge
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