Passive Activity - Individual

Publisher
WiseGuides, Inc.
2796 Greenspire Ln
Akron, Oh 44333
Copyright © 2010

Field of Study: Taxes
Level: Basic
Recommended CPE Credit 6 hours
Prerequisites: None
Advanced Preparation: None
Type of Delivery: Self-Study
Expiration: Course expires 1 year after purchase
Course Update: Feb, 2010
Accreditation: NASBA, IRS, CTEC, OTPB
Guarantee/Complaint Resolution

Course Outline


Lesson 1 - Overview of passive activities
Learning Objectives 1
General Overview
At-risk rules
Who must use the rules


Lesson 2 - Trade or Business Activity
Learning Objectives 2
Passive Trade or Business Activity
Hours of participation
Counting hours of participation
Proof of participation
Material Participation
Material Participation Tests
Limited partners
Retired or disabled farmer


Lesson 3 - Rental Activities
Learning Objectives 3
Rental Activities
What is not a rental activity
Rental real estate activities
Active participation
Decedents
Phase-out rule
modified adjusted gross income
Applying the phase-out


Lesson 4 - Special Rules For Real Property Trade or Business
Learning Objectives 4
Special Rules For Real Property Trade or Business
Qualifications if filing a joint return
Statutory effect of the special relief
treatment of suspended losses
Services as an employee
Closely held corporations


Lesson 5 - Recharacterization of Passive Income
Learning Objectives 5
Recharacterization of passive income
Significant participation income (1)
How to recharacterize SIPPA income
Rental of Nondepreciable Property (2)
Equity-financed lending activities (3)
Rental of property incidental to development (4)
Property rented to a nonpassive activity (5)
Licensing of intangible property by passthrough entities (6)
Activities are NOPAs under more than one situation


Lesson 6 - Calculating Allowed Passive Losses
Learning Objectives 6
Calculating passive losses (other than APRRE)
Mixed losses - Entity and APRRE
Allocating losses WITHIN an activity
Form 8582 and its worksheets


Lesson 7 - Dispositions of Passive Activities
Learning Objectives 7
Disposition Overview
Calculating the OVERALL gain or loss on disposition
Gain from passive disposition
Loss from passive disposition
Installment sale of an entire interest
Overall activity loss
If there is an overall activity gain
Partners and S corporation shareholders
Dispositions by gift
Dispositions by death


Lesson 8 - Alternative Minimum Tax
Learning Objectives 8
Overview of the Passive AMT Adjustment
How AMT differences can occur
Calculating the AMT activity gain or loss
Avoid duplication of AMT adjustments and preferences
Calculating the AMT passive amounts
Making the AMT adjustment on Form 6251
Calculating MAGI for AMT -1994 rule change


Lesson 9 - Grouping Activities
Learning Objectives 9
Grouping
Grouping activities
Appropriate economic units
Grouping Rental Activities
Grouping real and personal property rentals
Certain activities may not be grouped
Partnerships/S corporations
Activities conducted through a PSC or CHC
Partial dispositions

Course Objectives

Lesson - 1

After completing Lesson 1, you will be able to:
  • Identify when to apply the at-risk rules
  • Identify personal service activities
  • Identify how passive activity credits are treated

    • Pay particular attention to paragraphs marked by the Wiseguy.

    He'll guide you to key issues.



Lesson - 2

After completing Lesson 2, you will be able to:
  • Identify work done as an investor that does not qualify as participation in the activity
  • Identify when the activity is treated as a passive activity or nonpassive activity
  • Identify when to apply the activity rules to an activity

Lesson - 3

After completing Lesson 3, you will be able to:
  • Identify when the passive rules apply to rental activities
  • Figure the current year's allowable rental loss
  • Figure the amount of rental real estate loss that can offset nonpassive income
  • Identify the amount of AGI that will completely phase out rental real estate losses
  • Identify modified adjusted gross income for the purpose of the phaseout rule for the special $25,000 allowance
  • Figure the APRRE deduction for a taxpayer who files a separate return but lives with a spouse the entire year

Lesson - 4

After completing Lesson 4, you will be able to:
  • Identify who is treated as a real estate professional
  • Identify how a trade or business activity in which a taxpayer materially participated is treated
  • Identify (with regard to qualifying as a real estate professional) when to count personal services the taxpayer performed as an employee

Lesson - 5

After completing Lesson 5, you will be able to:
  • Define a significant participation passive activity
  • Identify the six activities where passive activities may have to be recharacterized and excluded from passive activity income

Lesson - 6

After completing Lesson 6, you will be able to:
  • Calculate passive losses
  • Figure the amount of rental activities that can be used to offset nonpassive income

Lesson - 7

After completing Lesson 7, you will be able to:
  • Identify how to treat passive activity losses in the year the activity is disposed of
  • Identify the treatment for capital losses on the disposition of an interest in a passive activity

Lesson - 8

After completing Lesson 8, you will be able to:
  • Calculate an AMT passive activity gain or loss

Lesson - 9

After completing Lesson 9, you will be able to:
  • Determine which activities may be grouped as a single activity
  • Identify the relevant facts and circumstances necessary to form an appropriate economic unit