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Course Details

Special Problems in Real Estate Taxation (Course Id 95)

Updated / QAS / Registry / EA
  Add to Cart 
Author : Danny C Santucci, JD
Course Length : Pages: 104 ||| Review Questions: 80 ||| Final Exam Questions: 70
CPE Credits : 14.0
IRS Credits : 14
Price : $113.95
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 95

Description :

This real estate taxation book is designed to survey selected “hot” topics having a direct impact on the property owner and investor. The emphasis is on problem areas where the unwary beginner and expert alike can be trapped. In this real estate taxation CPA course, you will learn to identify dangers involving installment sales, imputed interest, exchanging, equity participation, condemnation, passive loss rules, and transactions with foreign investors.

Usage Rank : 18235
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 : 15-Dec-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 - 95

Keywords : Taxes, Special, Problems, Real, Estate, Taxation, cpe, cpa, online course
Learning Objectives :

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

Chapter 1                Tax Economics

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

    * Financial fundamentals and tax planning elements
    * Taxable income
    * Tax-free income
    * Tax-deferred income
    * Tax-sheltered income
    * Budgeting
    * Cash
    * Acquisition
    * Assets
    * Management
Learning Objectives:

       After reading Chapter 1, participants will be able to:
    1. Determine what constitutes building an estate, preserving wealth, and distributing assets in the context of financial fundamentals and tax planning elements.
    2. Identify types of income, from a financial and tax perspective, to be budgeted into cash so that income-producing assets can be acquired and managed for an effective investment plan.
    3. Recognize the types of fringe benefits that employers can provide to employees tax-free.
    4. Specify budget rules, ways that cash can be used, guidelines that should be applied when purchasing assets, and money management rules.
Chapter 2                Installment Sales & Time Value of Money

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

    * Installment method
    * Imputed interest
    * OID
    * Real property sales & casual sales of personal property
    * Related party sales
    * Like-kind exchanges
    * Contingent payments or price
    * Dealer dispositions
    * Installment obligations in excess of $5 million
    * Dispositions of installment obligations
Learning Objectives:

       After reading Chapter 2, participants will be able to:
    1. Recognize the importance of the installment method, select requirements set forth in §453 to determine whether the installment method may be used, and specify terminology associated with the installment method.
    2. Determine the impact of §483 (imputed interest rules) and §§1271 through 1274 (original issue discount rules) on installment sales.
    3. Specify the rules associated with real property sales and casual sales of personal property, the superstructure of provisions associated with the related party rules of §453, and the exceptions that override basic installment planning.
    4. Identify how the contingent payment sales have changed due to the Installment Sales Revision Act of 1980, specify other contingent payment rules, and determine circumstances when dispositions of installment obligations occur.
Chapter 3                Mortgage Finance

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

    * Mortgage costs
    * Interest deduction
    * Interest-free & below-market rate loans
    * Imputed interest & OID
    * Shared appreciation mortgages
    * Tax treatment overview
    * Types of equity participation debt
    * Tests to determine what constitutes interest
    * Option & conversion rights
    * Convertible indebtedness
Learning Objectives:

       After reading Chapter 3, participants will be able to:
    1. Identify mortgage financing specifying advantages and disadvantages and determine how to amortize mortgage costs.
    2. Determine interest using Deputy v. DuPont, 308 U.S. 488, and specify key aspects of personal interest, investment interest, prepaid interest, and points.
    3. Recognize interest-free or below-market interest rate loans and how they relate to lenders’ interest income and borrowers’ interest paid under §7872.
    4. Identify long-term financing techniques and characteristics of a shared appreciation mortgage and their impact on lenders and borrowers.
    5. Specify tests that determine what constitutes interest and their effect on the tax treatments of equity participation, and identify equity participation debt.
Chapter 4                Home Sales & Like-Kind Exchanges

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

    * Home sales under §121
    * Special rules for ownership & use requirements
    * Prorata exception
    * Three elements of like-kind exchanges
    * Related party exchanges
    * Like-kind requirement for personal property
    * Multiple asset exchanges
    * Identification requirements for delayed exchange regulations
    * Actual & constructive receipt rule for delayed exchange regulations
    * Exchanges of partnership interests
Learning Objectives:

       After reading Chapter 4, participants will be able to:
    1. Identify the elements of the $500,000 home sale exclusion, how to apply it, and specify safe harbor regulations associated with the home sale exclusion.
    2. Determine the advantages of §1031 exchanges, their requirements, and the types of true exchanges, and cite the rules of boot and their effect on like-kind exchanges.
    3. Recognize the regulations for related party exchanges, foreign real property exchanges, and multiple property exchanges, and specify the former codification systems and how they related to exchanged depreciable tangible properties.
    4. Identify the regulations for delayed (deferred) exchanges, specify safe harbors that can be used without risk of actual or constructive receipt, and determine what partnership interests may be exchanged under §1031 and those that may not.
Chapter 5                Involuntary Conversions

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

    * Threat of condemnation
    * Property voluntarily sold
    * Easements
    * Condemnation award
    * Severance damages
    * Special assessment withheld from an award
    * Gain or loss from condemnations
    * Postponement of gain
    * Replacement period
    * Related party rule
Learning Objectives:

       After reading Chapter 5, participants will be able to:
    1. Identify condemnations and involuntary conversions under §1033 recognizing their impact on the recognition of gain or loss.
    2. Specify variables of a condemnation award including their effect on income and the cost of newly acquired property. 3. Determine severance damages and recognize the complexity of their treatment.
    4. Cite the rules on the reporting of payments associated with involuntary conversions, determine gain postponement choices, and specify the related party rule.
Chapter 6                Passive Loss & At-Risk Rules

       At the start of the Chapter, 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 Chapter 6, participants will be able to:
    1. Identify the basic types of income and the “buckets” of income and loss under §469 that can control what a taxpayer can deduct against other income.
    2. Recognize the suspension of disallowed losses and how it relates to passive losses, and specify the special rules for types of transfers that are not deemed to be fully taxable dispositions.
    3. Identify taxpayers subject to §469 and whether clients fall into one of the categories of taxpayers who are subject to the passive loss rules.
    4. Specify ways that a taxpayer can avoid having an activity become subject to the passive loss limits identifying the requirements for each, and recognize the effects of the §469 limitations on credits and losses from passive activities.
    5. Identify an activity and passive activity loss, determine the treatment of carryover losses and the allocation process, recognize the characterization of gain from the exchange, sale, or other disposition of an interest in property used in an activity or held through a partnership or S corporation, and cite the special rule for rental real estate.
    6. Specify the recharacterization rules under the regulations, determine passive activity credits, recognize the benefits and uses of the passive activity audit guide, and identify the impact of the at-risk limit rules.
Chapter 7                Sales by Foreign Investors

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

    * FIRPTA
    * United States real property interests
    * United States property holding corporations
    * Exceptions to U.S. property holding corporations
    * Foreign corporations
    * Distributions
    * Withholding & reporting requirements
    * Non-foreign affidavit
Learning Objectives:

       After reading Chapter 7, participants will be able to:
    1. Recognize the requirements of the Foreign Investment in Real Property Tax Act of 1980, and determine a United States real property interest using §897 to determine what dispositions by foreign investors will be taxed.
    2. Identify interests in foreign corporations that can be used to avoid taxes on their disposition, and improve reporting of U.S. real property interests by foreign investors.
Chapter 8                REITs

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

    * Benefits of REIT pools
    * Advantages over limited partnerships
    * Organizing a REIT
    * Self-liquidating REITs
    * Taxation
Learning Objectives:

       After reading Chapter 8, participants will be able to:
    1. Cite reasons for establishing a REIT that generates annual income that is tax-sheltered and is apt to grow over time, specify advantages that REITs have over limited partnerships and their effect on investments and shareholders, and recognize the development of the self-liquidating REIT.
    2. Identify how management operates a REIT, determine ways that REITs and the fees they pay their advisers can grow, and specify requirements with regards to organization, operation, assets, and income that are set forth in §856 through §858.
Course Contents :

Chapter 1 - Tax Economics

Financial Fundamentals

Tax Planning Elements

Assets, Income, & Cash



Income Splitting/Matching


Fringe Benefits


Section 1034 Sale or Exchange of Residence - Repealed

Section 1031 “Like-Kind” Exchanges


Deferred Compensation

Qualified Corporate Retirement Plans

Self-employed Plans

Individual Retirement Accounts

Installment Sales


Age 55 Exclusion - Repealed

Home Sale Exclusion - §121

Municipal Bonds

Gifts & Inheritances

Life Insurance


Rule #1: Expenses - 60%

Rule #2: Taxes - 20%

Rule #3: Savings - 10%

Rule #4: Education - 10%





Chapter 2 - Installment Sales & Time Value of Money

Installment Method




Imputed Interest & OID


Sale at a Loss

Section 483 - Imputed Interest


Imputed Interest Rates

Small Transaction Exception

Intra-family Land Exception


Sections 1271-1274 & OID

OID Rates


Cash Method Debt Instrument Exception

Computation of OID

Personal Use Property - Buyer’s Deduction of Imputed Interest

Payments, Mortgages, Recapture & Repossession

Real Property Sales – Payments After Year of Sale

Mortgage in Excess of Basis

Wrap-around Indebtedness

Professional Equities Decision


Practical Issues

Section 1038 - Repossession by Seller

Repossession of Principal Residence

Related Party Sales

Resale Rule

Related Persons


Depreciable Property

Contingent Payments or Price

Installment Sales Revision Act of 1980

Contingent Payment Sale

Maximum Selling Price Transactions


Fixed Payment Term Transactions


No Maximum Selling Price or Fixed Payment Term


Income Forecast Method



Special Rules


Repeal of Installment Treatment for Dealer Dispositions


Residential Lot & Timeshare Exception

Interest Computation


Installment Obligations in Excess of $5 Million

Computation of Interest



Disposition of Installment Obligations

Gain or Loss



Tax-free Transfers

Chapter 3 - Mortgage Finance


Two Major Benefits

Mortgage Costs


Lender’s Costs

Interest Deduction - § 163

Personal Interest

Phase-In Rules (Long, Long Ago in a Galaxy Far Away)

Investment Interest

Prepaid Interest


Prepayment Penalty

Lender’s Interest Income & Borrower’s Interest Paid

Interest-Free & Below-Market Rate loans

Two Imputations

Tax Character


Categories of Loans & Timing of Imputations

All Other Loans

Gift & Demand Loans

Exceptions to Gift Loan Rules

$10,000 De Minimis Exception

$100,000 De Minimis Exception

Imputed Interest & OID


Sale at a Loss

Overstated Interest

Reporting Mortgage Interest Received From Individuals

Equity Participation Debt

The Shared Appreciation Mortgage - SAM

Characteristics of a SAM

Tax Treatment Overview

Unsettled Treatment

Revenue Ruling 83-51

Types of Equity Participation Debt

Contingent Interest

Option or Conversion Right

Does Equity Participation Debt Constitute Interest?

Basic Tests to Establish Interest

Farley Realty Corp.

Kena, Inc.

Caselaw Factors

Revenue Ruling 83-51

Significance of R.R. 83-51

Limitations of R.R. 83-51

Partnership Recharacterization - Culbertson Rule

Tax Consequences of Debt Recharacterization

Option & Conversion Rights

Original Issue Discount - A Special Issue for Conversion & Option Rights

Convertible Indebtedness

Tax Consequences of Conversion

Chapter 4 - Home Sales & Like-Kind Exchanges

Home Sales - §121

Ownership & Use Requirements

Special Rules

Occasional Absences

Tacking of Prior Holding Period

Rental of Personal Residence


Vacant Land

Mixed Personal & Business Use of Home

Depreciation after May 6, 1997


Prorata Exception

Safe Harbor Regulations

Change in Place of Employment


Unforeseen Circumstances

Use of Old §1034 & §121

Limitations on Exclusion

Remainder Interests

Section 1031 “Like Kind” Exchanges

Exchange Advantage

Importance of Deferral

Three Elements

Exchange Requirement

Two-party Exchanges

Multi-party Exchanges



Delayed Exchanges

Qualified Property Requirement

Like-Kind Requirement

Rules of Boot

Related Party Exchanges

Definition of Related Party

Exceptions to the Two-Year Rule

Contractual Protection

Transactions Between A Partner & Partnership

Foreign Real Property Exchanges

Qualified §1031 Exchange of Personal Property Repealed

Requirements for Personal Property - Prior to 2018

Like-Kind or Like-Class

Like-Kind Personal Property - Identical

Like Class Personal Property - General Asset or Product Class

Five, Four, Then Six Digit Product Classes

Other Personal Property

Multiple Asset Exchanges

Exchange Groups

Aggregation & Allocation

Delayed (Deferred) Exchange Regulations

Deferred (Delayed) Exchange Definition

Identification Requirements

Identification & Exchange Periods

Application of §7503

Method of Identification

Property Description

Incidental Property - 15% Rule


Substantial Receipt

Multiple Replacement Properties

Actual & Constructive Receipt Rule

Four Safe Harbors

Safe Harbor #1 - Security

Safe Harbor #2 - Escrow Accounts & Trusts

Disqualified Person

Who Is An Agent?

Safe Harbor #3 - Qualified Intermediary

Who Is A Qualified Intermediary?

Direct Deeding


Simultaneous Exchanges

Safe Harbor #4 - Interest

Interest Reporting - §468B(g)

Restrictions On Rights to Money & Other Property - “g(6)” Limitations

Outside Transfers of Money or Other Property

Exchanges of Partnership Interests

Effective Date of Partnership Provisions

Reverse Exchanges - R.P. 2000-37

Chapter 5 - Involuntary Conversions


Threat of Condemnation

Reports of Condemnation

Property Voluntarily Sold


Condemnation Award

Amounts Withheld From Award

Net Condemnation Award

Interest on Award

Payments to Relocate

Severance Damages

Treatment of Severance Damages

Expenses of Obtaining an Award

Special Assessment Withheld from Award

Severance Damages Included in Award

Gain or Loss from Condemnations

How to Figure Gain or Loss

Part Business or Part Rental

Postponement of Gain

Choosing to Postpone Gain

Cost Test

Replacement Period


Replacement Property Acquired Before the Condemnation


Time for Assessing a Deficiency

Related Party Rule

Chapter 6 - Passive Loss & 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 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

Chapter 7 - Sales by Foreign Investors


United States Real Property Interests

U.S. Property Holding Corporations



Foreign Corporations


Withholding & Reporting Requirements

Non-foreign Affidavit

Chapter 8 - Reits

REIT Pools - §§856-860


Advantages Over Limited Partnerships

Organizing a REIT


Income & Growth

Self-Liquidating REITs


Organization & Operation

Assets & Income

Management Flexibility

Penalty for Failure to Request Information

De Minimis Rule For Tenant Service Income



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