Posted in tax
Under IRC Sec. 469(c)(7)(B), real estate professionals may treat otherwise passive rental real estate activities as nonpassive if (1) more than 50% of personal services during the tax year are performed in real property trades or businesses in which the taxpayer materially participates, and (2) the taxpayer spends more than 750 hours of service during the tax year in real property trades or businesses in which they materially participate. In an emailed Chief Counsel Advice, the IRS stated that a trust cannot meet these qualifying tests because they are intended to apply only to individuals. Only individuals are capable of performing personal services and the statute states that the personal services must be performed by the taxpayer.
Where a taxpayer may have multiple properties, it is critical that an election be made to have the properties grouped for tax purposes - or else the above criteria applies to EACH activity.
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Last Updated by Mike on 2012-11-06 07:02:35 AM