DESCRIPTION
This module explores the rules governing the grouping and aggregation of activities for federal income tax purposes. Participants examine the concept of an economic unit, activities eligible and ineligible for grouping, and special considerations for limited partnership interests, personal property, and real property. The module also provides a high-level overview of the tax consequences associated with the disposition of grouped activities. In addition, participants review the rules for grouping rental activities, including real estate professional requirements and applicable elections. Finally, the module addresses §199A aggregation rules through practical case studies and group discussions that reinforce proper application of the rules.
LEARNING OBJECTIVES
- Differentiate between grouping under the passive activity loss rules and aggregation under IRC §199A.
- Identify activities that may be grouped as a single economic unit, including the factors used to determine an appropriate economic unit.
- Explain the basic rules governing the disposition of grouped activities for passive activity loss purposes.
- Determine when rental activities may be grouped, including the requirements for real estate professional status and rental grouping elections.
- Determine whether a taxpayer meets the §199A aggregation criteria by applying the rules to a practical fact pattern.
- (Optional) Discuss how hobby loss rules impact grouping.
