November 24, 2010
Who is not considered a ‘real estate professional’ for tax purposes?
Attorney specializing in real estate CPA’s specializing in real estate Banker or mortgagor Investment advisor Financial planner or consultant Interior ...
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November 23, 2010
Difference between a real estate professional, a dealer in real property and an investor in real estate for tax purposes
A real estate professional must spend more than one half his/her time on ‘real property business.’ Unless the real estate professional ‘materially participates’ in rental activity losses are passive. A real estate dealer of real property sells and buys properties on a frequent and substantial basis...
November 22, 2010
Passive Activities and the Real Estate Professional – IRC 469(c)(7) and Reg. 1.469-9
A qualifying real estate professional may deduct rental real estate losses for each rental in which he/she materially participates provided 3 tests are passed: More than one half of the taxpayer’s personal services must be in real property ...
November 21, 2010
Common Mistakes with Passive Activities – IRC 469 – IRS Form 8582
Not grouping related activities as one activity Treating equipment leasing as non-passive by placing the revenue from such on Schedule ‘C’ or Schedule K-1 line 3. Rentals are passive even if the taxpayer materially participated Deduct rental real estate losses when AGI is more...
November 19, 2010
Passive Asset Disposition
There are two distinct issues to evaluate when disposing of a passive asset: Is the disposition considered to be a qualifying disposition under reg 1.469 making the losses deductible? Is the gain...
November 17, 2010
Adoption Tax Credits including Tax Credit Carry Forwards are now FULLY REFUNDABLE in tax year 2010 According to IRS Notice 2010-66
According to Marilyn E. Brookens, an attorney in the IRS Office of Associate Chief Counsel (Income Tax and Accounting), “Effective for the 2010 tax year, the adoption tax credit is a FULLY REFUNDABLE TAX CREDIT. The credit was made refundable by Section 10909 of the...
November 16, 2010
Reporting 1099-C income, cancellation of debt income exclusion – IRS form 982
Debt that is forgiven is considered income for taxes purposes and is reportable to the IRS. The debt forgiven is reported by the lender to the IRS on form 1099-C. The debt forgiven is reported by the taxpayer as other income on Form 1040, Line...
November 15, 2010
New IRS Forms for Reporting Exercise of Stock Options
The IRS has issued two new forms for reporting stock options. Form 3921, Exercise of an Incentive Stock Option Under Section 422(b), and Form 3922, Transfer of Stock Acquired Through An Employee Stock Purchase Plan Under Section 423(c), reflect the information reporting required by the...
November 13, 2010
What happens with suspended prior year losses when a now non-passive activity generates net income?
If the current year non-passive activity triggers deductibility of prior year suspended passive activity losses, IRC 469(f) permits a prior year passive loss to offset current year income from the same activity, even though that income might be non-passive in the current year. While net...
November 12, 2010
Grouping Passive Activities – IRS Rev Proc 2010-13
This new IRS Revenue Procedure is hugely important. Beginning in tax years after 1/24/2010 the IRS is requiring a written statement to accompany the tax return that lists how passive investment activities are grouped. The statement must include your name, address, employer ID #, and/or...