This course explains the special rule that allows certain individuals to apply the material participation rules to real estate rental activities to avoid their classification as passive activities.
Publication Date: August 2021
Designed For
Practitioners with clients who own rental real estate. Practitioners who advise clients on the passive activity loss rules.
Topics Covered
- Quick §469 review
- Relevance and rationale of §469(c)(7)
- Key rules and terminology
- Grouping of rental real estate
- IRS Audit Techniques Guide Sampling of court cases
- How §469(c)(7) interacts with other aspects of the passive activity rules and related rules
- Including Sections 199A, 469 and 1411
- Recordkeeping considerations
- Tips for avoiding problems
Learning Objectives
- Identify how the §469(c)(7) "real estate professional" rule works
- Describe the rationale behind this special rule
- Differentiate the real estate rental grouping options and how to make a grouping election
- Gain an appreciation of how to avoid problems in applying the special rule
- Recognize the benefit of being a real estate professional is
- Recognize what a rental real estate professional should do when grouping rental real estate activities under §469(c)(7)(A)
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
None
Advance Preparation
None
Instructor
Annette Nellen
Annette Nellen, CPA, CGMA, Esq., is a professor in and director of San Jose State University's graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, advanced individual taxation, employment tax, ethics, leadership, and tax policy.
Annette chairs the AICPA Digital Assets Tax Task Force and serves on the AICPA Disaster Relief Tax Task Force. She formerly served on the AICPA Tax Executive Committee, including 2.5 years as chair. She was the lead author of the AICPA tax policy concept statement #1, Guiding Principles of Good Tax Policy: A Framework for Evaluating Tax Proposals (2001, updated 2017), still in use today. Annette is also active with the tax sections of the ABA, CalCPA and California Lawyers Association. Annette is the recipient of the 2013 Arthur J. Dixon Memorial Award given by the Tax Division of the AICPA, the highest award given by the accounting profession in the area of taxation. In 2019, Annette was the recipient of the CLA’s Benjamin F. Miller Award for outstanding achievement and contribution in the field of state and local taxation law. Annette was included in Accounting Today's 2024 List of the Most Influential People in Accounting.
Annette is a regular contributor to Tax Notes State, authoring a column called Moving Forward? She is the author of Bloomberg BNA Tax Portfolio #533, Amortization of Intangibles. She is co-author and co-editor of four tax textbooks from Cengage. Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform. She maintains the 21st Century Taxation website and blog (www.21stcenturytaxation.com). Prior to joining SJSU in 1990, Annette was with Ernst & Young and the IRS.