ITX - 41 Flashcards
(41.1) The __ rules allow a taxpayer a deduction for losses only to the extent that the taxpayer is actually at risk for the amount lost.
at-risk
(41.1) For activities that involve holding ___, a client is at risk for the share of debt secured by the real estate if it is borrowed from an ordinary lender (bank or mortgage lender) even though no one is personally liable for the debt.
real property
(41.1) Once a loss qualifies for recognition under the at-risk rules, it may also be subject to the ___ rules.
passive activity loss
(41.1) Passive losses only offset __ income for individuals, estates, trusts, and personal service corporations.
passive
(41.1) C corporations can offset passive losses against ___, but not ___.
- business income
- portfolio income
(41.2) A ___ is one that involves the conduct of a trade or business in which the taxpayer does not materially participate.
passive activity
(41.2) Passive Activity - Sec. 469: To materially participate: The taxpayer participates more than ___ hours.
500
(41.2) Passive Activity - Sec. 469: To materially participate: The taxpayer’s participation constitutes essentially __ participation.
all
(41.2) Passive Activity - Sec. 469: To materially participate: The taxpayer participates ___ hours, but that is more than any other participant.
100
(41.2) Passive Activity - Sec. 469: To materially participate: The taxpayer materially participated in any ___ of the last ___ years.
5
10
(41.2) Passive Activity - Sec. 469: To materially participate: The activity involved providing ___.
personal services (e.g., health, accounting, performing arts)
(41.2) Passive Activity - Sec. 469: To materially participate: The taxpayer participates for ___ hours in this activity, and his or her total participation in all such activities exceeds ___ hours.
100
500
(41.2) Rental activities are always ___ activity, except for short-term rentals (hotels), rentals with significant services (hospitals), and rentals which are for nonexclusive use (golf courses).
passive
(41.2) An interest in a working oil or gas property, if held in a capacity other than a ___, is not classified as passive activity.
limited partner
(41.2) ___ are generally not considered to have materially participated in the partnership
Limited partners
(41.2) Passive Activity - Sec. 469: Computations - What limits are applied first?
At-risk limits
(41.2) Passive losses cannot be used to offset __ income
portfolio or active income
(41.3) Losses from __ can only be used to offset PTP passive income; they cannot be used to offset income from other passive activities.
publicly traded partnerships (PTPs)
(41.3) Exception for Active Participation: Deduction of up to $25,000 in losses from __ activities if the client actively participates, which is only available to ___.
- rental real estate
- estates, individuals, and limited partners
(41.4) Exception for Active Participation: If modified AGI exceeds $___, then the amount that can be deducted is reduced ___ dollar for every ___ dollars by which modified AGI exceeds $___.
- $100,000
- one
- two
- $100,000
(41.4) Exception for Active Participation: Real estate professionals may treat rental real estate activities as active income if they spend at least ___ hours in a real estate trade or business and more than ___% of their personal services are provided to those types of businesses.
- 750 hours
- 50%
(41.4) Vacation Home Rentals - Sec. 280A: If a vacation home is rented for less than ___ days in a year, the rental income is not included in gross income, and the taxpayer can take ___ for the rental use of the home.
- 15
- no deduction
(41.4) Vacation Home Rentals - Sec. 280A: If a vacation home is rented for less than 15 days in a year, the taxpayer can take deductions for ___.
- mortgage interest
- property taxes
- casualty losses
(41.5) Vacation Home Rentals - Sec. 280A: If a vacation home is rented for more than ___ days in a year and the taxpayer’s use does not exceed the greater of __ days or __% of the number of days the home is rented, the home will be treated as RENTAL PROPERTY.
- 14
- 14
- 10%
(41.5) Vacation Home Rentals - Sec. 280A: If a vacation home is rented for more than 14 days in a year and the taxpayer’s use does not exceed the greater of 14 days or 10% of the number of days the home is rented, the taxpayer can deduct ___.
expenses allocable to the rental use (maintenance, utilities, depreciation, and repairs)
(41.5) Vacation Home Rentals - Sec. 280A: If a vacation home is rented for more than 14 days in a year and the taxpayer’s use does not exceed the greater of 14 days or 10% of the number of days the home is rented, the __ allocated to personal-use days will not be qualified residence interest and will not be deductible.
mortgage interest
(41.5) Vacation Home Rentals - Sec. 280A: If a vacation home is rented for more than 14 days in a year and the taxpayer’s use does not exceed the greater of 14 days or 10% of the number of days the home is rented, the mortgage interest allocated to personal-use days will not be ___ interest and will not be deductible.
qualified residence
(41.5) Vacation Home Rentals - Sec. 280A: A vacation home is a residence if the owner’s personal use is longer than?
14 days or 10% of the period of rental use
(41.5) Vacation Home Rentals - Sec. 280A: If a vacation home is considered a residence, the deduction for rental use is further limited to the ___ income for the year, minus ___..
- gross
- the deductions allowable in the absence of rental use (e.g., interest and taxes)
(41.6) Rules for Vacation Homes: What are the tax results for Personal Use of:
351 days or more
- Income excluded
- No rental deductions
(41.6) Rules for Vacation Homes: What are the tax results for Personal Use of:
More than 14 days or 10% of rental period
- Income included
- Deductions allowed of allocated expenses to the extent of the rental income
(41.6) Rules for Vacation Homes: What are the tax results for Personal Use of:
Up to 14 days or 10% of rental period
- Income included
- Deductions allowed of allocated expenses
(41.6) Rules for Vacation Homes: What are the tax results for Rental Use of:
351 days or more
- Income excluded
- No rental deductions
(41.6) Rules for Vacation Homes: What are the tax results for Rental Use of:
More than 14 days or 10% of rental period
- Income included
- Deductions allowed of allocated expenses to the extent of the rental income
(41.6) Rules for Vacation Homes: What are the tax results for Rental Use of:
Up to 14 days or 10% of rental period
- Income included
- Deductions allowed of allocated expenses
