The Disappearing Tax Breaks – Working with and Around the At-Risk and Passive Activity Rules

This program was recorded live on Tuesday, July 18, 2023

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Continuing Education

CPE Program Knowledge Level: Overview
2 CPE Credit; NO prerequisites or advance preparation
CTEC Course #: 3022-CE-0160
IRS/RPO Approved Program
#7ZBUJ-T-00111-23-O (Online/Group) Live (Group-Internet Based)
#7ZBUJ-T-00111-23-S (QAS Self Study) Archive
Federal Tax Law (2 Hours)

Program Content

This online learning program, presented as a live webcast, will be also archived for QAS Self Study. The program will be available for viewing for 12 months after the live webcast. A panel of IRS and industry experts will present the content during a live, interactive discussion, where participant questions can be submitted. Questions will be answered live on the program or posted on the Resources page.

The program, through a lively round-table discussion and real time interaction with the audience, examines the limitations imposed on tax deductions and credits by the at-risk and passive activity rules. The program will focus on determining the amount at risk in an activity and how that determination serves as a limit on tax deductions. Panelists also will examine the passive activity rules, how they operate, and the limitations they impose. In both cases, the panel will explore the taxpayers and activities that are subject to the rules

By the end of the program, participants will have a practical understanding, through accurate, current, and effectively designed communications, of the limitations imposed by both the at-risk rules and the passive activity rules.

Program Learning Objectives

  1. Identify which section of the IRS code defines "material participation."
  2. Identify on which schedule to report income from billboard rental.
  3. Identify the schedule used to report income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in Real Estate Mortgage Investment Conduits (REMIC's).
  4. Identify the form used by noncorporate taxpayers to figure the amount of any passive activity loss (PAL) for the current tax year and to report the application of prior year unallowed PALs.

Program Outline

  • At-Risk Rules in General
    • Taxpayers and Activities Subject to the Rules

  • Deductions Under the At-Risk Rules
    • Order of Deductions
    • Recapture of Prior Deductions

  • Determining the Amount at Risk
    • Borrowed Amounts
    • Avoidance of At-Risk Rules
    • Computation of At-Risk Amount

  • Qualified Nonrecourse Financing
    • Financing from Related Person
    • Transfer of Property

  • Passive Activity Loss Rules in General
    • Taxpayers Subject to the Rules
    • Activities Subject to the Rules
    • Material Participation

  • Identification of Separate Activities
    • In General
    • Limitation on Grouping
    • Regrouping
    • Reporting Grouping

  • Limits on Rental Activities
    • Rental Defined
    • Self-Rented Property
    • Rental Incident to Development
    • Rental of Nondepreciable Property
    • Active Participation in Rental Real Estate
    • Real Property Business Exception

  • Treatment of Losses and Credits
    • Computing Deductible Loss
    • Closely-Held Corporation's Loss
    • Disallowed Losses
    • Passive Activity Credits



Alan Pinck, EA
A. Pinck & Associates

Alan Pinck is an Enrolled Agent with over 30 years of tax preparation experience in the San Francisco Bay Area. He has built a practice specializing in individual, small business tax preparation and audit representation. You have seen Alan presenting at NTPI events, CSEA Super Seminar, Spidell Publishing as well as a variety of other presentations for tax groups and small business associations. Having represented thousands of tax returns in audit, Alan has obtained tremendous insight of the audit process as well as knowledge on a wide variety of tax issues.

Industry Panelists

Lawrence Pon

Lawrence Pon, CPA, PFS, CFP, EA, USTCP, AEP

Mr. Pon is a Certified Public Accountant, Personal Financial Specialist, Certified Financial Planner, Enrolled Agent, United States Tax Court Practitioner, and Accredited Estate Planner in Redwood Shores, CA.

Mr. Pon has been in practice since 1986 and enjoys helping his clients reach their financial goals. He frequently speaks on tax and financial planning topics to tax professionals, financial advisors, and the general public nationally.

Mr. Pon is a long-time member of NAEA and CSEA.

Mr. Pon received his BS in Business Administration with emphases in Accounting and Finance from the University of California, Berkeley and MS in Taxation from Golden Gate University in San Francisco.

Darryl Brown

Darryl Brown, Ph.D.

As a former senior manager, with a "big six" public accounting firm, Darryl has a vast array of experience in the area of federal taxation of individuals, small businesses including partnerships and S corporations as well as large public companies (C corporations). As a former college professor, he also has an extensive background teaching, writing, and researching issues pertaining to the same areas of federal tax law including financial reporting and accounting for income taxes. Darryl is EA, CPA, an NTPI Fellow, and he frequently teaches tax courses for NAEA and an array of EA and CPA state societies.

Rich Vitraelli

Richard L. Vitraelli, EA, USTCP
CEO, Vittax Advisory Corporation

Rich has been helping individuals and businesses in West Florida and beyond to organize their finances and reduce their taxes since 1980. He is a member of the American Bar Association, Tax Section, the National Association of Enrolled Agents, and a Fellow of the National Tax Practice Institute. Rich is also enrolled to practice before the IRS and is a US Tax Court Practitioner (USTCP) admitted to practice before the United States Tax Court.

Content Consultant

David F. Windish, J.D., LL.M
Content Consultant

David F. Windish, J.D., LL.M. in taxation, is a tax attorney and consultant. He has served as an instructor of tax-advantaged investments at the New York Institute of Finance; an Instructor of business law at the U.S. Merchant Marine Academy, Kings Point, N.Y.; and an adjunct professor at George Mason University, Fairfax, Va. He has also served as executive editor for Tax Analysts; managing editor for Business Strategies, published by CCH; and senior editor for the Institute for Business Planning.

Mr. Windish is the author of Practical Guide to Real Estate Taxation, published by CCH and currently going into its sixth edition. Earlier works include Tax Advantaged Investments and Investor's Guide to Limited Partnerships, both published by the New York Institute of Finance. Through the Center for Video Education, he authored continuing education courses dealing with real estate and closely held corporations. Those courses included readings, case studies, and videotape segments.

Mr. Windish is a graduate of Rutgers University Law School and the New York University School of Law, Graduate Division. He has been heard as a guest speaker at professional meetings and seminars and on popular radio programs.

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