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  • Writer's pictureHolly Roundtree CPA

2019 – 08/28

Another court case shows how important it is to properly document qualification for real estate activity loss deductions. Generally, a loss from real estate activities is considered a passive activity loss (PAL) that can’t be deducted from nonpassive income. But there’s an exception for “real estate professionals.” One requirement is that the taxpayer perform more than 750 hours of service involving the real estate. In a recent case, a rental property owner deducted a net loss from other income. As proof of his eligibility, he presented calendars purporting he’d met the 750-hour test. The IRS disputed his claim, and the U.S. Tax Court determined that his loss was a PAL. (TC Memo 2919-104)

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