Monthly Tax Update with Ed Zollars: Passive Loss Rules: Strategic and Defense Frameworks under IRC § 469 (2 hours - afternoon) - Webcast

Overview

This two-credit-hour CPE session gives experienced CPAs and tax practitioners a practitioner-focused, litigation-tested framework for applying the passive activity loss rules of IRC Section 469. The course walks through the statutory mechanics that segregate active, passive, and portfolio income; the seven material participation tests under Temporary Treasury Regulation Section 1.469-5T(a) and the evidentiary standards courts have used to reject unsubstantiated participation logs; the two-pronged test for qualifying as a real estate professional under Section 469(c)(7); the activity aggregation election under Treasury Regulation Section 1.469-9(g) and late-election relief under Revenue Procedure 2011-34; and the interaction of these rules with the 3.8% Net Investment Income Tax under Section 1411. Drawing on recent case law involving failed real estate professional claims and rejected time logs, the course closes with a practical framework for assessing accuracy-related penalty exposure under Section 6662 and assembling audit-ready documentation. Practitioners who advise clients with rental real estate, closely held businesses, or other loss-generating passive investments will come away with a concrete checklist for classifying income, substantiating participation, and defending return positions on audit.

OSCPA has partnered with the Idaho Society of CPAs for this event.

Highlights

• The IRC § 469 statutory framework: income baskets, the rental activity default rule, and the short-term rental exception
• The seven material participation tests under Temp. Treas. Reg. § 1.469-5T(a) and the recordkeeping standards courts require to substantiate hours
• Suspended passive losses and the requirements for a full release of losses on disposition of an activity Real Estate Professional Status (REPS) under IRC § 469(c)(7): the two-pronged test, spousal attribution limits, and activity aggregation elections under Treas. Reg. § 1.469-9(g)
• Late aggregation election relief under Revenue Procedure 2011-34
• The interplay of REPS and rental real estate with the 3.8% Net Investment Income Tax under IRC § 1411
• Accuracy-related penalty standards under IRC § 6662, the Substantial Authority and Reasonable Basis standards, and Form 8275 disclosure strategy
• A practical audit defense checklist drawn from recent case law on failed REPS claims and disallowed participation logs

Designed For

CPAs and tax professionals

Objectives

Get Up-to-date information on a variety of tax topics