• Course Information

    Title: Passive Losses - Tax Implications
    Category: Taxation
    Field of Study: Taxes
    Course Code: T019-0124
    CPE Credits: 9.5
    Price: $67.95


This course addresses the practical aspects of Section 469 and the needed skill to handle pragmatic issues. Fundamentals are reviewed, planning opportunities identified, creative strategies discussed and evaluated along with remaining traditional approaches. The goal of this instructive program is to understand and solve problems under Section 469, with emphasis on tax savings ideas. Readers will overview the proper administration of this complex and often cumbersome provision.

Delivery Method:

Level: Overview

Prerequisites: None

Advanced Preparation: None

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Course Details

Author: Danny Santucci

Category: Taxation

Field of Study: Taxes

Passing Score: 70%

Publication Date: 03/29/2020

Technical Details: Taxation is a technical field of study for all states.

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Chapter 1:     Overview
1. Recognize the broad impact of the Section 469 limitation provision by:
a. Recalling the differences between prior law loss treatment and the former and current treatment of losses;
b. Citing the prior tax shelter problem and Congress's motives and rationales in passing Section 469;
c. Specifying economic decision-making changes caused by the limitation;
d. Identifying income and loss into categories; and
e. Recognizing the concept of investor participation as central in determining the allowance of a passive loss.
2. Specify the mechanics of the passive loss rules, recognize the impact of Section 469 to appropriate deductions, identify what type of income may be offset by passive losses and then, determine a passive loss.
3. Identify passive losses under Section 469 by:
a. Citing the "bucket" analogy of Section 469 to:
(i) specify the categories of a client's annual income and the Section 469 limitation's impact, and
(ii) determine "passive items" and "material participation" under Section 469;
b. Locating portfolio income based on items deemed nonpassive under the Code; and
c. Identifying circumstances that allow for special treatment of income and loss.
4. Recognize the suspension of disallowed losses, identify ways to ultimately "free up" passive losses, specify the treatment of passive credits including potential basis adjustment, and determine a fully taxable disposition indicating the impact of related party transactions.
5. Identify the impact and tax consequences of a fully taxable disposition (FTD) by:
a. Determining an entire interest disposition, particularly for a partnership or grantor trust;
b. Specifying the allowance of suspended losses upon installment sale, exchange, gift or death;
c. Selecting the order of recognized tax attributes upon an FTD; and
d. Recognizing ways to escape the application of the FTD and other passive loss rules particularly for closely held corporations and personal service corporations that change their operations and nature.
6. Identify which clients are or are not subject to the passive loss rules by:
a. Specifying types of corporations to which Section 469 applies and citing the elements of their Code definitions;
b. Recognizing the general rental activity rule exception and eligibility requirements
c. Determining "pre-enactment interest," "qualified interest" and "pre-enactment activity" identifying their Section 469 "phase in" treatment; and
d. Citing Section 469's effective date and recognizing the IRS's application authority under 469(l).

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QAS: Yes

CPA: Suitable for all CPAs

IRS: Enrolled Agents Program Number 263UK-T-00201-19-S

Profession Identifiers : CPA, EA

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