This course will cover the main provisions of the passive activity loss rules, and related topics such as the at-risk rules. The major exceptions to the passive activity loss rules are also explored in this course. The active participation standard, real estate professional rule, and the oil and gas working interest provision are examined, as well as deduction-equivalent credits for low-income housing and historic rehabilitation activities. The course wraps up with an in-depth look at the vacation home rules.

5–1 Identify legal forms or structures a direct participation program may use and the tax and nontax considerations in selecting a form.
5–2 Identify tax mechanisms that enable direct participation programs to provide specific tax advantages.
5–3 Identify factors that may limit the availability of federal income tax benefits from a direct participation program.
5–4 Identify rules, deductions, or benefits related to a direct participation program.
5–5 Identify requirements that must be met to qualify for a special tax benefit available from a direct participation program.
5–6 Evaluate a situation to select the most appropriate direct participation program, if any.
5–7 Analyze a situation to calculate the allowable deductions under the passive activity loss rules.
5–8 Identify rules related to a vacation, or second, residence.
5–9 Analyze a situation to calculate the allowable deductions under the vacation home rules.

Author: Michael B. Cates, MS, CRPS®, CFP®

Michael B. Cates, MS, CRPS®, CFP® joined the College in 1986, and is the professor for the Income Tax Planning course of the CFP Certification Professional Education Program. He received his CFP® certification in 1995, and completed the College’s Master of Science degree program in 1997. Mike is also the lead professor for the introductory Income Tax Planning course in the College’s master’s program. In addition to his responsibilities at the College, Mike also maintains a tax planning and preparation firm in Aurora, Colorado. You can reach Mike at mike.cates@cffp.edu.

Complexity Level: Intermediate