Reg 1 Module 5

Question 1

What are the 4 rules a taxpayer must meet to deduct rental passive losses and at what modified AGI is are these losses phased out?

Answer 1

1. Actively participating
2. Taxpayer more than 10% of rental activity
3. Modified AGO under 100,000
4. May deduct only 25,000 annually net passive losses attributable to real estate ( phase out begins from 100,000-150,000
5. Deduction is completely phased out at Modified AGI that exceeds 150,000.

Question 2

What is the phase out range for participating net rental activity and what % is applied to the phase out amount.

Answer 2

Phase out rage = 100,000-150,000

Percentage of phase out range = 50%

Minimum deduction is 25,000, then subtracted by 50% of every dollar that goes over 100,000.

Question 3

When can current and unused passive losses be fully deductible together

Answer 3

Year in which activity is sold. Year of DISPOSAL

Question 4

Rules on an individuals suspended passive activity losses. How many years forward and back?

Answer 4

Carried forward until utilized and never carried back.

Question 5

What is the tax treatment for net losses in excess of “at risk” amount for an activity?

Answer 5

They are not deductible and carried forward w/out expiration, until the activity produces income to deduct against.

Question 6

The limiting the allowability of passive activity losses and credits applies to:

Answer 6

Personal Service Corporations