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Orlando IRS Tax Forum Recap

  
The Orlando Forum is behind us and here are some of the interesting topics and observations that came up from our presentations on Schedule E and Schedule D: 

Real Estate professionals continue to be a hot topic- the issues are the passive activity exception and self-employment income.  

-For rental income and expenses to be included in the calculation for self-employment tax, Treas. Reg. 1.1402 explains that only those rentals from property held for resale (ie: Inventory) can be included in determining SE tax.  Property held for “investment or speculation” is specifically excluded from SE tax calculation.  There is a difference between a “real estate professional” and a “real estate dealer” that the regulation defines.  And the difference between “active participation” and “material participation” also generated a number of follow-up questions.


-Another hot topic is self-rental rules.  Generally, if a property owner rents to an entity in which the owner also has material participation, the net rental incomes are non-passive while net rental losses remain passive.  This is another of those situations where the IRS gets the advantage regardless of operational outcomes.


For anyone looking for answers, we recommend they read the Passive Activity Audit Technique Guide published by IRS.


There was a lot of interest in our Schedule E and D “Due Diligence Checklists” that are available via email from being scanned at the NSA Booth in the Exhibit Hall.


The Circular 230 Panel, on which NSA EVP John Ams served, gave us an interesting tour of Circ. 230, Sections 10.22 through 10.31.  The panel discussed issues surrounding a “hypothetical client” with a wide variety of facts and circumstances.  It is humorous to note that one question posed by the moderator near the end of the presentation prompted one of the other panelists to remark, “Who cares, I fired this client three minutes ago!”  Comic relief is always popular at the forums.

Until next time....



Sunset at the Hilton Orlando overlooking the nearby Orange County Convention Center. 

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https://connect.nsacct.org/blogs/robert-cross/2012/06/25/orlando-irs-tax-forum-recap