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Passive Activity Loss Limitations: Working with the Complex PAL Rules & Real Estate Tax Issues.

4.5 (49)

J. Patrick Garverick, CFP, CPA


Wednesday, July 01, 2020 | 09:00 AM EDT

  • AFSP
  • CPA
  • CVA
  • EA
  • Tax Preparer
  • CTEC
  • CFE

8 Credits


Subject Area


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Course Description

Since the enactment of the passive activity loss limitation rules in 1986, taxpayers and practitioners have been frustrated in attempts to have economic losses incurred in activities described as “passive” offset income derived from other sources. The passive income and loss rules create complex tax reporting, controversy, and confusion as to how various business and investment activities should be classified. For clients with real estate investments, it is often difficult to sort out which losses and expenses can be used to offset income. The focus on “passive” income and losses as distinguished from “active” income and losses has intensified greatly now as the new 3.8-percent Net Investment Income Tax (NIIT) has become effective and subjects passive income to this new tax

This online CPE seminar, presented by note author and tax educator, J. Patrick Garverick CPA, CFA will help participants understand the complications involved in offsetting income by applying losses from activities described as “passive.” He is an outstanding speaker and presenter, will provide straightforward explanations and helpful tips on this important topic, so clients can be advised with confidence. All tax professionals, tax preparers, accountants, attorneys, financial and estate planners who advise clients on critical tax, estate planning, and wealth management matters will benefit from this practice-oriented seminar. Time will be provided to ask questions directly to Mr. Siegel via email during the program.

This comprehensive training is designed to get the accountant up to speed quickly with the complex passive activity loss (PAL) rules that apply to certain investments in trades or businesses and rental activities. The cornerstone of the course is the in-depth coverage of the detailed tax law and regulations applicable to Passive Activities under IRC §469 and how and when the 3.8% Net Investment Income Tax under §1411 applies.


  • What activities constitute a passive activity
  • How passive activity losses are reported
  • Addressing passive activity issues under the new 3.8-percent Net Investment Income Tax;
  • Passive activities described (trade or business activities, rental activities);
  • Activities that are and are not considered passive;
  • When a rental activity is passive and when it is not
  • How to treat self-rental income;
  • Active participation and material participation;
  • Passive activity income and deductions;
  • The “small landlord” exception
  • Real estate professionals and the passive activity loss rules;
  • Grouping activities;
  • Dispositions of passive activities; 
  • Trust and estate issues.

Learning Objectives

  • To Identify what activities are subject to the PAL rules and the exceptions to them including those for certain real estate professionals
  • To define a passive activity, rental and trade or business under IRC §469
  • To identify the seven ways to materially participate in an activity and the six exceptions to the definition of a rental activity
  • To calculate the passive activity income and losses allowed and the tax ramifications of passive activity dispositions
  • To recognize what passive activity investments are potentially subject to the 3.8% net investment income tax under IRC ​ §1411

Who Should Attend?

  • Accountant
  • CPA - Mid Size Firm
  • CPA - Small Firm
  • Enrolled Agent
  • Entrepreneurial CPA
  • Tax Firm
  • Tax Managers
  • Tax Practitioners
  • Tax Preparer
  • Tax Pros
  • Young CPA


    [no_of_record] => 49
    [average] => 4.5102




Patrick is one of the best presenters on myCPE! His command of tax subjects and the ability to present even complex concepts clearly is remarkable. I have attended his previous class on tax, it was amazing


This was a very complete review of the passive activity rules. This info is valuable to anyone who does taxes for high-income taxpayers, and many high-income taxpayers have passive activity investments.


Mr.Patrcik was excellent and in 8 hrs accomplished what he set out to do – present an overview of the most important changes affecting real estate under the passive activity rules and the exceptions. He also very generously provided an outstanding handout – a much more detailed version of his actual presentation, which was much appreciated!


Mr. Patrick provided great information in understanding the complex passive loss rules. I really enjoyed Mr.Patrick provided various case studies to solve for active participation.


Patrick's enthusiasm for the subject helped make this webinar fun and interesting. I am in governmental accounting professionally but wanted a refresher on passive activities for my personal endeavors. This was definitely worth the early wake up required.