Proving Material Participation for the Passive Loss Rules
Authored by James R. Hamill Ph.D., CPA
About this Course
This course is particularly important in helping clients prepare for IRS audits as well as in handling ongoing audits involving material participation challenges. Topics covered include: How material participation affects the passive loss rules; How material participation affects the NIIT; Tests of material participation found in the regulations; Detailed review of court decisions evaluating how to document material participation; Analysis of lessons learned by prior court challenges.
After completing this course, you should be able to: Describe the seven tests for material participation; Recognize how to best defend your clients against a material participation challenge; Identify which types of taxpayers the passive activity loss rules are applicable to; Recognize the tests a limited partner may use to establish material participation; Differentiate court cases where the IRS prevailed with respect to disputes related to material participation and key lessons learned; Define what happens when suspended losses may offset income when a closely held C corporation (CHC) becomes a non-CHC; Differentiate correct statements with respect to material participation; Identify how material participation tests are applied in various cases; Recognize which types of expenses were required to be proved with contemporaneous written logs based on the requirements of DEFRA in 1984; Define how each of indicator of no material participation is applied, based on the IRS Audit Guide; Recognize the number of hours a person must devote to real estate activities for a person to qualify as a real estate professional.