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Federal Income Tax Passive Activity Losses Tax Tax Loss

IRS Rejects Court’s Passive Activity Loss 5% Owner and Grouping Decision

The passive activity loss (“PAL”) rules can limit the ability to deduct losses from passive activities, such as rental losses.  The real estate professional and activity grouping rules can allow taxpayers to avoid having their losses limited by the PAL rules.  Earlier this month, the IRS issued AOD  2017-007, IRB 2017-42 , to note its formal […]

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Federal Income Tax Passive Activity Losses Tax

Court Says Mortgage Broker Not a Real Estate Professional

The passive activity loss rules can prevent real estate investors from being able to deduct their real estate losses.  That is the intent and purpose of the rules.  The rules and how they have been interpreted draw some known but arbitrary lines in the sand.  The recent Hickam v. Commissioner, T.C. Summary Opinion 2017-66, case […]

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Federal Income Tax Passive Activity Losses Tax Tax Loss

Grouping Nonpassive Activities Under the PAL Rules

Taxpayers are often surprised to learn that some losses may not be netted against gains in the current tax year. This is often due to the passive activity loss and material participation rules. The IRS National Office addressed these rules in TAM 201634022, in the context of whether two businesses should be grouped together and […]

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Federal Income Tax Passive Activity Losses Tax

Real Estate Professionals Subject to Material Participation Rules

But can you be a real estate professional for the passive activity loss rules and then have your passive losses denied under the material participation rules?  The Gragg v. United States, No. 14-16053 (9th Cir. 2016) case presents an opportunity to consider this fact pattern. The Facts & Procedural History The taxpayer was a real […]