- 7 -
Loss From Rental Activities
Section 469 generally disallows for the taxable year any
passive activity loss. Sec. 469(a). A passive activity loss is
defined as the excess of the aggregate losses from all passive
activities for the taxable year over the aggregate income from
all passive activities for that year. Sec. 469(d)(1). A passive
activity is any trade or business in which the taxpayer does not
materially participate. Sec. 469(c)(1). Rental activity
generally is treated as a per se passive activity regardless of
whether the taxpayer materially participates. Sec.
469(c)(2),(4). Under section 469(c)(7)(B), however, the rental
activity of a taxpayer in a real property trade or business (real
estate professional) is not per se passive activity. Instead, it
is treated as a trade or business and subject to the material
participation requirements of section 469(c)(1). Sec.
1.469-9(e)(1), Income Tax Regs.
A taxpayer qualifies as a real estate professional and is
not engaged in a passive activity if:
(i) more than one-half of the personal services
performed in trades or businesses by the taxpayer
during such taxable year are performed in real property
trades or businesses in which the taxpayer materially
participates, and
(ii) such taxpayer performs more than 750 hours of
services during the taxable year in real property
trades or businesses in which the taxpayer materially
participates.
Sec. 469(c)(7)(B). A trade or business includes being an
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011