Ok thanks. I get it now.
So in example # 2, he can deduct a loss greater than 25000, right? Since it is non-passive.
So in example # 2, he can deduct a loss greater than 25000, right? Since it is non-passive.
-
You have the right to remain silent. Anything you say will be misquoted, then used against you. -
That is correct.Originally posted by WhiteOleander View Post
Another example would be where he has three rental units. None by themselves will he meet the 100 hour test, but if he combines all three, he exceeds 100 hours. In this case, he would have to elect to combine all three activities into one activity, in order to meet the material participation rule.
The difference between material participation and active participation is the ability to deduct more than $25,000, or any amount if AGI exceeds $150,000.Comment
-
Isn't broker license required?
I was having a conversation with an Auditor recently and asked him about Real Estate Professionals. He told me that only a broker could be a RE Pro and that an agent never could. I had a client that was an agent and owned several rental properties and we were considering if she was a RE Pro.In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de TocquevilleComment
-
Thanks Bees, It is alot clearer now.
You have the right to remain silent. Anything you say will be misquoted, then used against you.Comment
-
The code says "brokerage trade or business." The word "licensed" does not appear in the code. The Regs simply say see Code Section 469(c)(7)(C) for the definition.Originally posted by DaveO View Post
When I look up the term "broker" in the dictionary, I get:
Congress writes tax law, not IRS Auditors. The term "broker" as written by Congress in the Internal Revenue Code includes Real Estate Agents.1. an agent who buys or sells for a principal on a commission basis without having title to the property.
2. a person who functions as an intermediary between two or more parties in negotiating agreements, bargains, or the like.
3. stockbroker.
–verb (used with object) 4. to act as a broker for: to broker the sale of a house.
–verb (used without object) 5. to act as a broker.Last edited by Bees Knees; 11-10-2007, 04:17 PM.Comment
-
Are you saying then that I, as a Real Estate Salesperson licensed by my state, that I can not deduct my losses in my business because I do not hold the license of Real Estate Broker?Originally posted by DaveO View PostComment
-
No, that's not what Dave said. We are talking about the passive activity loss limitation rules. Unless you are a real estate professional, any rental real estate activity that you hold is considered a passive activity, subject to the passive activity loss limitations.Originally posted by dborg2001 View PostComment
-
Real Estate Professional
Thanks everyone that replied, however the IRS auditor has pushed the concept that without a brokers license, a real estate sales agent cannot be a real estate professional. I am going to have to go to appeals to defend my client. Additionally, I spoke with Gary McBride - a professor at Cal State Hayward and San Francisco's / Californias tax expert who has said there is a case in tax court related to this same issue in San Ramon and a case in Petaluma that is on its way to appeals.
The auditor said he went to a national IRS class and that was the official position of the agency. Seems the IRS is trying to make new tax law to increase their collections.Comment
-
CalCPA5 posts an interesting issue. I wonder...based on the above summary if an unlicensed tax preparer can dedcut his/her expenses?Dave, EAComment
-
appeal result
Dear CalCPA5,
I am in a similar situation where IRS auditor says that a real estate sales agent can not claim more than $25k loss in schedule E. I am curious how your client's appeal went or if there have been any conclusive results from any of the appeals for the real estate sales agents?
Thanks!
AprilComment
Comment