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Course Details

Passive Loss and At-Risk Rules - Tax Mini Course (Course Id 627)

Updated / QAS / Registry / EA
  Add to Cart 
Author : Danny C Santucci, JD
Course Length : Pages: 34 ||| Review Questions: 15 ||| Final Exam Questions: 13
CPE Credits : 2.5
IRS Credits : 2
Price : $22.45
Passing Score : 70%
Course Type: NASBA QAS - Text - NASBA Registry - IRS Enrolled Agents
Technical Designation: Technical
Primary Subject-Field Of Study:

Taxes - Taxes for Course Id 627

Description :

With the adoption of the passive loss limitation rules, taxpayers are looking to CPAs for guidance related to what deductions are allowed, disallowed, or suspended. Updating practitioners on the practical aspects of 469, this CPA tax course addresses the needed skill to handle these pragmatic issues. Fundamentals are reviewed, planning opportunities are identified, and creative strategies are discussed and evaluated along with remaining traditional approaches. The goal of this instructive course is to understand and solve client problems under 469, with emphasis on tax savings ideas. Participants will learn to master the proper administration of these complex and often cumbersome provisions.

Usage Rank : 13750
Release : 2023
Version : 1.0
Prerequisites : General understanding of federal income taxation.
Experience Level : Overview
Additional Contents : Complete, no additional material needed.
Additional Links :
Advance Preparation : None.
Delivery Method : QAS Self Study
Intended Participants : Anyone needing Continuing Professional Education (CPE).
Revision Date : 12-Jul-2023
NASBA Course Declaration : Participants must complete the final examination within one year of purchase and with a minimum passing grade of 70% or better to receive CPE credit unless otherwise noted on the Course History page (i.e. California Ethics must score 90% or better). After logging in click on the Course History links on your My Courses page for the Begin date and Expire date for the Final Exam.
Approved Audience :

NASBA QAS - Text - NASBA Registry - IRS Enrolled Agents - 627

Keywords : Taxes, Passive, Loss, AtRisk, Rules, Tax, Mini, Course, cpe, cpa, online course
Learning Objectives :

As a result of studying the assigned materials, you should be able to meet the objectives listed below.


      At the start of the materials, participants should identify the following topics for study:

    * Passive loss rules
    * Material participation
    * Activity definition
    * Passive & nonpassive activities
    * Passive activity loss
    * Rental activities
    * Recharacterization of passive income
    * Passive activity credits
    * Passive activity audit guide
    * At-risk limits
Learning Objectives:

      After reading the materials, participants will be able to:
    1. Identify affected taxpayers, categories of income and loss, and passive losses under 469 and necessary 469 calculation steps and specify the 469 & 1211 limits and the ordering and suspension of any disallowed losses.
    2. Recognize a taxpayer's material participation in an activity by:
      a. Identifying the material participation tests and their application to entities such as partnerships and corporations;
      b. Specifying the activity grouping rules and exempt activities;
      c. Determining passive activity particularly, the treatment of rental activity as passive; and
      d. Identifying "nested" activities.
    3. Identify special passive loss rules and calculations by:
      a. Determining alternating use effects on amount realized and adjusted basis and citing additional loss limitations outside of 469;
      b. Recognizing requirements for the special $25,000 allowance; and
      c. Specifying recharacterization rules and their purpose.
    4. Recognize the passive activity audit guidelines identifying audit issues, determine the real estate rental activity credit exception, and cite the at-risk limit rules as they relate to 469.
Course Contents :

Chapter 1 - Passive Loss and At-Risk Rules


Passive Loss Rules


Active Losses


Calculating Passive Loss - The Fish Rules

Categories of Income & Loss



Material Participation

Suspension of Disallowed Losses

Fully Taxable Disposition

Abandonment & Worthlessness

Related Party Transactions



Increase Basis Election

Other Transfers

Transfer By Reason Of Death - 469(g)(2)

Transfer By Gift - 469(j)(6)

Installment Sale - 469(g)(3)

Activity No Longer Treated As Passive Activity - 469(f)(1)

Closely Held To Nonclosely Held Corporation - 469(f)(2)

Nontaxable Transfer

Ordering of Losses

Capital Loss Limitation - 1211


Allocation of Suspended Losses

Taxpayers Affected

Noncorporate Taxpayers

Regular Corporations

Personal Service Corporations

Definition - Temp. Reg. 1.469-1T(g)(2)(i)

Personal Services

Principal Activity - 50% Test

Substantially Performed by Employee-Owners - 20% Test

Material Participation

Trade or Business Definition

February 19, 1988 Regulations

General Rule for Individuals

Record keeping

Meaning of Participation

Exceptions to Definition - The Unwork Rules

Husband & Wife Counted as One

Annual Test

Pre-87 Participation - 500 Hours

Special Rules for Entities

Limited Partnership Interests Presumption

Exceptions to Presumption

Trusts and Estates

Retired & Disabled Farmers


Activity Definition

Final Regulations

Relevant Factors

Rental Activities

Limited Partnership Activities

Partnership & S Corporation Activities



Partial Dispositions

Passive & Nonpassive Activities

Trade or Business

Characterization Based on Participation

Rental Activity


Non-Passive Activities

Rental Activities of Real Estate Professionals

Eligibility Standards

Working Interests in Oil & Gas

Entities That Limit Liability

Activities within Activities

Passive Activity Loss

Husband & Wife

Special Rule for Closely Held Corporations

Net Active Income

Carryover of Disallowed Losses

Treatment of Carryover Losses

Allocation Process

Significant Participation Activities

Income from Dispositions of Property Used in Passive Activities

Mixed Use of Property

Alternating Use

De Minimis Use Rule - 10/10 Test

Disposition of Appreciated Property Formerly Used in a Nonpassive Activity

Rental Activities

Special Rule for Rental Real Estate

Five Conditions

Active Participation

Change in Participation

Application of $25,000 Allowance Rule

Aggregation & Ordering:

Net Operating Loss

Net Leases


Recharacterization of Passive Income

Active Business Recharacterization

Significant Participation Income Rules

Ratable Portion of Income


Significant Participation Losses

Rental of Property Developed by Taxpayer

Self-Rented Property

Portfolio Income Recharacterization Rules

Rental of Nondepreciable Property

Equity Financed Lending Activities

Limitation on Recharacterization

Passive Activity Credits

Regular Tax Liability Allocable to Passive Activities


Exception for Real Estate Rental Activity Credits


Credits Subject to Passive Activity Limits

Allocation of Disallowed Credits

Treatment of Carryover Credits

Passive Activity Audit Guide

Indicators of Audit Issues

Investment Interest

Material Participation

Significant Participation Activities

Active Participation

Net Lease Properties

Vacation Rentals

Self-Charged Expenses

Rental & Nonrental Activity Grouping


At-Risk Limits

Amount At Risk

Taxpayers Affected

Closely Held Corporation

Qualified Corporation Exception

Qualifying Business Requirements

Loss Defined

Disallowed Losses

Form 6198

Partnership & S Corporation Limits

Activities Covered by the At-Risk Rules

Equipment Leasing

Real Property

Grouping of Activities

Partners & S Corporation Shareholders

At-Risk Amounts

Borrowed Amounts

Related Persons

Subsequent Years

Amounts Not At Risk

Nonrecourse Financing

Other Loss Limiting Arrangements

Reductions of Amounts At Risk



CPE Taxes Course: https://www.cpethink.com/tax-cpa-courses
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