PASSIVE LOSS ISSUES WITH SCHEDULE K-1S

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PASSIVE LOSS ISSUES WITH SCHEDULE K-1S

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Course Details

Overview of Topics

Basic rule of Passive Losses
11 mins
Burden and Records
20 mins
Material Participation 7 Tests Limited Partners
34 mins
Why Do We Care?
50 mins
Real Estate Pros
62 mins
Where to Report
72 mins

Course Description

Preparing and interpreting Form K-1 can be daunting even for experienced tax accountants. Proper completion of a client's federal Schedule K-1s to report a partner's share of a partnership's income, gains, losses, etc. has long presented challenges to tax advisers, particularly for specialized investment partnerships such as fund of funds or master limited partnerships. Changes to the Schedule K-1 beginning with the 2018 tax year may create additional complexity for partnerships and their tax advisers. The updated Schedule requires taxpayers to disclose the recipient partner's beginning share of partnership liabilities, as opposed to only the ending amount, which will help in tracking a partner's basis.

This CPE webinar will look at Passive activities and try to simplify the rules to make them easy! Passive activities have been around since the 1980s and tend to be a complex area of taxation. We will look at the general rules of passive activities and then look at the more complex issues such as grouping and proper tax planning.

This session will also cover the passive activity rules by explaining why they exist and their overall philosophy, describing their mechanics in terms attendees can understand, and illustrating planning strategies to use with clients.

Webinar Qualifies for

2 CPE credit of Taxes for all CPAs
2 CE credit of Federal Tax for Oregon Tax Preparers
2 CE credit of Federal Tax Subjects for California Tax Professionals (CTEC Approved - 6273)
2 CE credit of Federal Tax for Enrolled Agents ( IRS Approved : GEHNZ )
2 CE credit of Federal Tax for Maryland Tax Preparers
2 General Educational credit for Tax Professionals/Bookkeepers/Accountants

Learning objectives

To identify when passive determinations need to be made
To recognize that Passive Per Se - activity is always passive unless an exemption applies
To recall that Activity - The lowest level of function in a business
To recall that Material Participation - Meets one of seven tests outlined in IRC 469

About Presenter

Nicholas Preusch, CPA

Accounting Manager,PBMares, LLP

npreusch@gmail.com

Nicholas has worked with the Internal Revenue Service as a Revenue Agent and an Attorney with the IRS Office of Professional Responsibility. Nicholas has authored publications for the AICPA’s Journal of Accountancy, AICPA’s Tax Advisor, NATP’s Tax Pro Journal, and CCH’s Journal of Tax Practice and Procedure. He also co-authored a textbook, Tax Preparer Penalties and Circular 230 Enforcement, published by Thomson Reuters. Nicholas has been recognized as the Top 5 Under 35 CPAs in Virginia, and is a member of the VSCPA’s Tax Advisory Committee and the AICPA’s Tax Practice and Responsibilities Committee. Nicholas is an adjunct professor with the University of Mary Washington. He is a graduate of Carthage College, University of Connecticut (M.S. in Accounting), Case Western Reserve University School of Law (J.D.), and Georgetown University (LLM in Taxation).

PBMares, LLP

www.linkedin.com/in/nick-preusch-2b256986

Nicholas Preusch, CPA, JD, LLM, is a tax manager with PBMares, LLP. Nicholas has worked with the Internal Revenue Service as a Revenue Agent and an Attorney with the IRS Office of Professional Responsibility. Nicholas has authored publications for the AICPA’s Journal of Accountancy, AICPA’s Tax Advisor, NATP’s Tax Pro Journal, and CCH’s Journal of Tax Practice and Procedure. He also co-authored a textbook, Tax Preparer Penalties and Circular 230 Enforcement, published by Thomson Reuters. Nicholas has been recognized as the Top 5 Under 35 CPAs in Virginia, and is a member of the VSCPA’s Tax Advisory Committee and the AICPA’s Tax Practice and Responsibilities Committee. Nicholas is an adjunct professor with the University of Mary Washington. He is a graduate of Carthage College, University of Connecticut (M.S. in Accounting), Case Western Reserve University School of Law (J.D.), and Georgetown University (LLM in Taxation).

Review Questions

Question 1 : 00:15
Question 2 : 00:30
Question 3 : 00:45
Question 4 : 01:00
Question 5 : 01:15
Question 6 : 01:30

Review Questions
Final Quiz

Which one of the following is a passive income?
- Rental income from a building leased to a business where taxpayer works.
  Taxpayer worked for 300 hours on real estate business is a passive income as it does not clear the criteria of working 750 hours.
- Income from land, building, or other property held for investment.
  Taxpayer worked for 300 hours on real estate business is a passive income as it does not clear the criteria of working 750 hours.
- Any activity in which the spouse materially participated under IRC §469 (h)(5).
  Taxpayer worked for 300 hours on real estate business is a passive income as it does not clear the criteria of working 750 hours.
- Taxpayer worked for 300 hours on real estate business.
  Taxpayer worked for 300 hours on real estate business is a passive income as it does not clear the criteria of working 750 hours.
Which one of the following is a material participation test for a non-passive activity?
- If the taxpayer does most of the work.
  If the taxpayer does most of the work; if the taxpayer and/ or spouse worked more than 500 hours a year in business; and if taxpayer worked more than 100 hours and no one worked more hours: all are the material participation test for a non-passive activity.
- If the taxpayer and/ or spouse worked more than 500 hours a year in business.
  If the taxpayer does most of the work; if the taxpayer and/ or spouse worked more than 500 hours a year in business; and if taxpayer worked more than 100 hours and no one worked more hours: all are the material participation test for a non-passive activity.
- If taxpayer worked more than 100 hours and no one worked more hours.
  If the taxpayer does most of the work; if the taxpayer and/ or spouse worked more than 500 hours a year in business; and if taxpayer worked more than 100 hours and no one worked more hours: all are the material participation test for a non-passive activity.
- All of the above.
  If the taxpayer does most of the work; if the taxpayer and/ or spouse worked more than 500 hours a year in business; and if taxpayer worked more than 100 hours and no one worked more hours: all are the material participation test for a non-passive activity.
Which one of the following is not a condition in which rental activities that you cannot group under §1.469-4(d):
- All B, C, and D.
  If the rental property is owned in identical percentage with the business and leased back to the business, if rental is with a C-Corporation, and if rental activity is insubstantial: These are not the conditions in which rental activities that you cannot group under §1.469-4(d).
- If the rental property is owned in identical percentage with the business and leased back to the business.
  If the rental property is owned in identical percentage with the business and leased back to the business, if rental is with a C-Corporation, and if rental activity is insubstantial: These are not the conditions in which rental activities that you cannot group under §1.469-4(d).
- If rental is with a C-Corporation.
  If the rental property is owned in identical percentage with the business and leased back to the business, if rental is with a C-Corporation, and if rental activity is insubstantial: These are not the conditions in which rental activities that you cannot group under §1.469-4(d).
- Rental activity is insubstantial.
  If the rental property is owned in identical percentage with the business and leased back to the business, if rental is with a C-Corporation, and if rental activity is insubstantial: These are not the conditions in which rental activities that you cannot group under §1.469-4(d).
If a rental activity is having a Modified Annual Gross Income of over $150,000, then which one of the following is true?
- Taxpayer is allowed deductible loss on return up to $25,000.
  If a rental activity is having a Modified Annual Gross Income of over $150,000, then taxpayer is not allowed deductible loss.
- Taxpayer is allowed deductible loss on return less than $25,000.
  If a rental activity is having a Modified Annual Gross Income of over $150,000, then taxpayer is not allowed deductible loss.
- Taxpayer is not allowed deductible loss.
  If a rental activity is having a Modified Annual Gross Income of over $150,000, then taxpayer is not allowed deductible loss.
- None of the above.
  If a rental activity is having a Modified Annual Gross Income of over $150,000, then taxpayer is not allowed deductible loss.
Which of the following is a rental activity?
- Average customer use is 7 days or less.
  Average customer use is 7 days or less; property is available during defined business hours for non-exclusive use by customers; and Property is provided to a partnership or an S-Corporation: These all are examples of a not a rental activity.
- None of the A, C, and D.
  Average customer use is 7 days or less; property is available during defined business hours for non-exclusive use by customers; and Property is provided to a partnership or an S-Corporation: These all are examples of a not a rental activity.
- Property is available during defined business hours for non-exclusive use by customers.
  Average customer use is 7 days or less; property is available during defined business hours for non-exclusive use by customers; and Property is provided to a partnership or an S-Corporation: These all are examples of a not a rental activity.
- Property is provided to a partnership or an S-Corporation.
  Average customer use is 7 days or less; property is available during defined business hours for non-exclusive use by customers; and Property is provided to a partnership or an S-Corporation: These all are examples of a not a rental activity.
Which one of the following is true for the equipment leasing?
- Equipment leasing losses are always active.
  Equipment leasing losses are passive irrespective of taxpayer’s material participation.
- Equipment leasing losses are dependent on the involvement of the taxpayer for being active or passive.
  Equipment leasing losses are passive irrespective of taxpayer’s material participation.
- Equipment leasing losses are deductible.
  Equipment leasing losses are passive irrespective of taxpayer’s material participation.
- Equipment leasing losses are passive irrespective of taxpayer’s material participation.
  Equipment leasing losses are passive irrespective of taxpayer’s material participation.

Minimum 70% Questions answer should be right.

It is a ___ who is required to prove material participation.
- Taxpayer
- IRS
- Tax attorney
- Managerial authority.
Which one of the following is a not significant participation activity?
- Equipment rentals and other leasing activities
- Investment activities that are not a business
- A publicly traded partnership
- All of the above.
Which one of the following is not the test available to a limited partner?
- If taxpayer and/or spouse work more than 500 hours a year in the business
- If a business in which the taxpayer does most of the work
- If taxpayer materially participate in activity for any5 of the last l0 years
- If taxpayer materially participate in a personal service activity for any 3 prior years.
Passive activity losses can only be offset by which one of the following?
- Accumulated income until the start of the year
- Any income
- Passive income
- Fixed income securities
In which one of the following conditions we can deduct passive activity losses without passive activity income?
- If 100% of the activity is sold
- If the activity is sold to an unrelated party
- If all the gain or loss is realized and recognized
- All of the above.
Rental activities are per se _____.
- Active
- All of A, C, and D
- Active depending on the participation of the owner.
- Passive.
Which one of the following is considered a real property trade or business?
- All of B, C, and D.
- Acquisition
- Conversion
- Brokerage.
Which of the following is not considered the working hours for a specific rental activity?
- Travel time.
- Construction time.
- Exaggerated time.
- All of the above.
In which one of the following conditions all current and suspended carryovers passive losses are deductible in full?
- Taxpayer no longer has any ownership of the activity in any form or any entity or in any amount.
- The activity has been sold or otherwise disposed of to an unrelated party.
- All A, B, and D.
- All gain or loss have been realized and recognized.
Which one of the following gains that is not reported on Form 8582?
- Gain on sale of land held for investment
- Gain on sale of stocks, bonds or other portfolio income
- Gain on sale of self-developed rental property if rented less than 12 months.
- All of A, B, and C.

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Reviews

4.5

(14)

50%

RC

Rose Chee , EA

Nov 22nd 2020

Very helpful

MARGO GAGNON , CPA

Aug 10th, 2020

It was great. The instructor has a nice style -- content was technically above average, but his demeanor is not too stuffy!

NASBA Approved

MY-CPE LLC, 1600 Highway 6 South, Suite 250, Sugar Land, TX, 77478

MY-CPE LLC (Sponsor Id#: 143597) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.NASBARegistry.org.

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MY-CPE LLC (Sponsor Id#: GEHNZ) has entered into an agreement with the Internal Revenue Service, to meet the requirements of 31 Code of Federal Regulations, section 10.6(g), covering maintenance of attendance records, retention of program outlines, qualifications of instructors, and length of class hours. This agreement does not constitute an endorsement by the IRS as to the quality of the program or its contribution to the professional competence of the enrolled individual. Credit earned by attendees with a PTIN will be reported directly to the IRS as required of all providers. To ensure your CPE hours are reported, update your profile in My Account to include your PTIN number. Please note: IRS CE is only mandatory for EAs and ERPAs. For all other tax return preparers, CE is voluntary

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MY-CPE LLC (Sponsor ID# : 6273) has been approved by the California Tax Education Council to offer continuing education courses that count as credit towards the annual “continuing education” requirement imposed by the State of California for CTEC Registered Tax Preparers. A listing of additional requirements to register as a tax preparer may be obtained by contacting CTEC at P.O. Box 2890, Sacramento, CA, 95812-2890, toll-free by phone at (877) 850-2832, or on the Internet at www.ctec.org.

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BEST TAX RETURN WORKSHOP ON S CORPORATION (1120S) - 2020 Updates

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Cost $20
CPE Credits 2
CE Credits 2
IRS Course ID GEHNZ-T-00211-20-S
CTEC Course ID 6273-CE-0218
Subject Area Taxes
Course Level Basic
Instructional Method QAS Self Study
Prerequisites None
Advanced Preparation None
Published Date November 11 ,2020
Who should attend? Tax Attorney Tax Practitioners Bookkeeper Accountant CPA - Small Firm CPA - Mid Size Firm Accounting Firm Tax Pros Tax Firm Young CPA CPA in Business Tax Accountant (Industry) Tax Director (Industry) Accounting Practice Owners Entrepreneurial Accountant Tax Managers Accounting Managers Tax Preparer
Handout Material Download
Key Terms Download

On-Demand Webinars

IRC 199A: 2 YEARS IN – KEY OVERLOOKED PLANNING INITIATIVES

Wednesday, November 11, 2020 View Details/Register

IRS TAX PRACTICE & PROCEDURE INTRODUCTION

Friday, November 06, 2020 View Details/Register

BEST TAX RETURN WORKSHOP ON Partnerships & LLCs (FORM 1065) - 2020 UPDATES

Friday, November 06, 2020 View Details/Register

ITEMIZED DEDUCTION UPDATES - WITH EXAMPLES & CASE STUDIES

Thursday, November 05, 2020 View Details/Register

COVER YOUR ASSETS: FRAUD AND INTERNAL CONTROLS

Monday, November 02, 2020 View Details/Register

Excel Accountant: CREATING ERROR-FREE EXCEL SPREADSHEETS

Monday, November 02, 2020 View Details/Register

HOW TO ANALYZE YOUR CLIENT’S TAX SITUATION

Monday, November 02, 2020 View Details/Register

BEST TAX RETURN WORKSHOP ON S CORPORATION (1120S) - 2020 Updates

Friday, October 30, 2020 View Details/Register

IRS PENALTIES, ABATEMENTS, AND REASONABLE CAUSE

Wednesday, October 28, 2020 View Details/Register

YELLOW BOOK BOOT CAMP - NFP AND GOVERNMENTAL ACCOUNTING & AUDITING UPDATE

Wednesday, October 28, 2020 View Details/Register

IS IT DEDUCTIBLE: COMMONLY ASKED IRS DEDUCTIONS (UPDATED 2020)

Wednesday, October 28, 2020 View Details/Register

YELLOW BOOK BOOT CAMP – INTRODUCTION TO NFP AND GOVERNMENTAL ACCOUNTING & AUDITING

Monday, October 26, 2020 View Details/Register

Ethics for Wyoming CPAs

Friday, October 09, 2020 View Details/Register

CPA & ACCOUNTANTS: WHAT YOU SHOULD KNOW ABOUT CREDIT CARD SURCHARGING & IT'S LEGALITY

Thursday, October 22, 2020 View Details/Register