November 28, 2022


8 Total CPE Credits


Passive Activity Losses (PAL): Comprehensive

Learning Objectives

  • Identify trade or business activities subject to the PAL rules
  • Determine who qualifies as a real estate professional and the impact from such a designation.
  • Define a passive activity.
  • Learn the seven material participation methods of qualifying for active status.
  • Learn the tax rules that govern whether a rental activity is subject to the PAL rules.
  • Learn when passive losses are permitted to be reported by an individual taxpayer.
  • Determine how to report and then utilize a tax credit subject to the PAL rules.
  • Understand how the PAL rules work in conjunction with the other three-loss limitation rules.
  • Learn the six anti-abuse PAL rules that would recharacterize an otherwise passive gain as being active.

Major Topics

  • Historical review of tax shelters and the government's reaction over two decades.
  • Overview of the four loss limitation rules and how the PAL rules interact with the other limitations.
  • Definition of a PAL including a detailed review of the 7 determining factors contained in the Treasury
  • Regulations with a review of several recent court decisions that interpret this regulation.
  • How PALs can be utilized by an individual taxpayer.
  • How the activity grouping rules work including planning considerations on how to make the determination.
  • Review of the "active"? real estate rental loss provision.
  • Determine how to qualify as a real estate professional and the ramifications that this status has on the ability of an individual to utilize losses.
  • Learn the six Nonshelterable Passive Activity (NOPA) rules that act as anti-abuse rules to the PAL rules.
  • Discuss how the PAL rules impact tax credits.
  • Learn how the PAL rules impact other key tax provisions.
  • Discuss tax elections and planning techniques associated withPALs.

CPE Credits Available

Total CPE

Things to Know About This Course


General knowledge of individual/business income taxation and how they relate to passive activity laws.

Advanced Preparation


Intended Audience

Tax professionals.


California Society of CPAs

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