ࡱ> ( v/ 00DArialngsRoman4/A 0DGaramondRoman4/A 0 DTimes New Roman4/A 00DWingdingsRoman4/A 0@0.  @n?" dd@  @@`` 8&P   27<=>CDEFGHIJKLM^_`abcdefghijklmnopqrstuvwx|}( 0AA3@8PC ʚ;ʚ;g4jdjdLbA 0ppp@ <4dddd&) 0/A <4BdBdH* 0g4RdRdcA 0vpp pp0___PPT10 b___PPT9D<"@@%?,*,+,/ 5 80?  O  =wHIRC 469  Passive Activities Part 3%%PAGI, PAD, PAI, PAL !FPAL General RuleLoss from passive activity is only usable against income from a passive activity Individuals can t use PAL against active or portfolio income Sometimes, what seems to be PAGI will be treated as not PAGI (recharacterization rules) 469(i) - Special rule for dispositions  generally, an activity s PAL is  triggered upon taxable disposition of the activity.<QZ=ZZQ=-PAL, PAGI, PAD and relevanced469(d)(1)  PAL = excess of aggregate losses from all passive activities for the year, over aggregate income from all passive activities for the year. So some netting involved, but must track PAL per activity so know how much suspended PAL might be triggered if activity disposed of PAGI - an item of gross income if and only if such income is from a passive activity PAD - if and only if such deduction  (i) Arises (within the meaning of paragraph (d)(8) of this section) in connection with the conduct of an activity that is a passive activity for the taxable year; or (ii) Is treated as a deduction from an activity under 1.469-1T(f)(4) for the taxable year. More details in -2 and -2T regs Special rules for gains from dispositions, portfolio and personal service income Ordering rules relevant if the loss is also subject to passthrough basis limitations, 465 and capital loss limitations (discussed later) Calculations on Form 8582PP|PP PPP| , aCPAL1.469-2T(b) Generally, excess of passive activity deductions for the year over passive activity gross income for the year Different definition used for closely-held corporation -1T(g) PAL = excess of PAD over (PAGI +  net active income ) Basically just can t use PAD against portfolio income (but see -1T(g) for details (not necessary for BUS 225K)N =o =o 3 What is PAGI? 1.469-2T(c)Gross income from a passive activity Not portfolio income Unless derived in ordinary course of the trade or business, such as interest earned by a bank Not income from personal services PAGI  does not include compensation paid to or on behalf of an individual for personal services performed or to be performed by such individual at any time `:^":^"DPortfolio income PLR 201005016 S corp earned interest on construction loan proceeds it received Held: the interest income is portfolio income Not derived in the ordinary course of a trade or business No exception for interest arising from working capital Starting in 2013, 3.8% Medicare tax on unearned income of high income individuals and trusts starts (1411) Will approach of the 469 regs be used to define unearned or net investment income?xZoZrZlZSZorlS  ,`64"PAGI QuestionsPartnership owns one rental property. Had CODI in 2010 of $40,000. Is it PAGI? Your client owns an apartment building and is required to keep security deposits in separate account. Earns $1,000 of interest income each year. Q  Portfolio or rental income? Client earns royalties from business of licensing movie rights? Q  Portfolio or trade/business income?hnZ Z@nZ)nZ @) @More PAGI QuestionsPositive 481(a) adjustment Income from a covenant not to compete Gross income or gain allocable to business or rental use of a dwelling unit for any year in which 280A(c)(5) applies n5!:PAGI  disposition gain rules`General rule -2T(c)(2)   Treatment of gain. Except as otherwise provided in the regulations under section 469, any gain recognized upon the sale, exchange, or other disposition (a  disposition ) of an interest in property used in an activity at the time of the disposition or of an interest in an activity held through a partnership or S corporation is treated in the following manner: (1) The gain is treated as gross income from such activity for the taxable year or years in which it is recognized; (2) If the activity is a passive activity of the taxpayer for the taxable year of the disposition, the gain is treated as passive activity gross income for the taxable year or years in which it is recognized; and (3) If the activity is not a passive activity of the taxpayer for the taxable year of the disposition, the gain is treated as not from a passive activity. Interest in p/s and S corp stock are not property used in a PA BPP@P@,}&;%&Classification of disposition gain - 11.469-2T(c) and -2(c) 12-month lookback rule  if property used in more than one activity in 12 months preceding disposition, gain characterized and allocated among the activities on a reasonable basis,n ?&Classification of disposition gain - 21.469-2T(c) and -2(c) Substantially appreciated property rule  prop is SA if its FMV > 120% of its adjusted basis. If SA property previously used in a nonpassive activity, gain is NOT treated as passive unless property was used in a PA for either 20% of time it was held, or during the entire 24-month period ending on disposition date. @<n< <&Disposition Question^T sells office building which he held for 3 years. During 12 months prior to sale, T used building 7 months as rental and 5 months in his business. Q - How to treat T s gain?>'Disposition QuestionnAnne acquires building on 1/1/97 and uses it until 3/31/08 in a business activity in which Anne materially participates. On 4/1/08, Anne leases the building to Bob and on 12/31/09, sells it for $500,000. Adjusted basis = $200,000. Q  nature of disposition gain? Q  is the building  substantially appreciated? &11@*:Income recharacterization rules -2T(f) and -2(f) SET 1;;&"Rules preventing conversion of active business income into PAGI: SPA rule (f)(2) Rental of self-developed property* (f)(5) Self-rented property rule* (f)(6) (self rental rule) * applies on property by property basis bAtnn)nAt)A+9Income recharacterization rules -2T(f) and -2(f) SET 2::&!Rules preventing conversion of portfolio income into PAGI Rental of non-depreciable property (f)(8) Equity-financed lending activities (f)(4) Passthrough entities licensing intangible property* (f)(7) * applies on property by property basisb:nn(n:( ZF,-Authority for income recharacterization rules..&,Regulatory authority Congress gave to IRS at 469(l) Preserve intent of 469 Leg history:  to protect underlying purpose of the passive loss provision, i.e., preventing the sheltering of positive income sources through the use of tax losses derived from passive business activities. Without such rules, taxpayers would be encouraged to: Change participation levels Convert investment activities to passive@MEMEG- SPA -2T(f)(2)SPA  same definition as under -5T MP test If PAGI from all SPAs > PAD from such activities, net passive activity income treated as nonpassive activity income EX  T has 3 SPAs and aggregate hours are 400 SPA MP test not met, so passive If generate income, treated as non-passive IF t/p met the SPA MP test, the recharacterization rule would not apply (would not be subject to 469)VZ.ZKZgZ.Kg b<D k5_. SPA Example2008 SPA $1,000 income Rental $1,000 loss Result: report $1,000 active income and c/f $1,000 PAL 2009 SPA $1,000 loss Rental $1,000 loss Result: both losses are PALs and c/fL^J^J b/)Rental of self-developed property (f)(5)**&Net rental activity income not treated as PAI if, Any gain from disposition of property is included in income for the TY Property was rented out for less than 12 months prior to its disposition, and T materially or significantly participated in the value enhancement of the property,2q2d0:Self-rented property rule (f)(6) (self rental rule);;&Rental income from an item of property rented to a T or B in which T materially participates is treated as NOT from a PA EX  Al, a lawyer, rents office space to the law p/s in which he is a MP. If the rental activity generates income, it will not be PAI$RJ!Self-rental rule upheld by courtsKrukowski, 89 AFTR 2d 2002-827, 279 F.3d 547 (7th Cir. 2002) Congress gave broad grant of authority to IRS in 469(l) The rule  comports with Congress s goal of eliminating tax shelters. Congress referred to example of situation to be addressed by IRS as including related property leases which reduce active business income and create passive income. B=% & % Yf1)Rental of nondepreciable property (f)(8)**& :Net passive activity income from activity of renting property is not treated as PAI if the unadjusted basis of the depreciable property is less than 30% of the unadjusted basis of all property rented in the activity. EX  rental of a parking lot where avg period of customer use > 30 days. If unadjusted basis is: Land $80,000 Pavement $20,000 The rule will apply if rental generates income because unadjusted basis of depreciable property ($20,000) is less than 30% of the unadjusted basis of all property rented in the activity ($100,000)<:PPP:g2)Equity-financed lending activities (f)(4)**&PPurpose  to prevent individuals, partnerships and S corps from becoming lenders in order to generate PAI when it would otherwise be portfolio income  Equity-financed lending activity  (1) involves T or B of lending money; and (2) avg outstanding balance of liabilities (deposits) incurred for the TY does not exceed 80% of avg outstanding balance of the interest-bearing assets (loans) held in the activity for the year*ZZ,Z^i3:Passthrough entities licensing intangible property (f)(7);;& 0"If T acquired interest after substantial development was completed, the royalty income is not PAI, but is recharacterized as portfolio income unless an exception is met: 1) expenditures reasonably incurred by development entity for TY with or within T s TY wrt development or marketing of such property, exceed 50% of the gross royalties from licensing such property; or 2) T s share of development or marketing expenditure for all TYs of entity beg with TY of entity in which T acquired interest and ending with TY of entity ending with or within T s current TY exceeds 25% of FMV of T s interest in such property at time T acquired interest in the entity..ZZ>jj4 Question 1aGeorge is a lawyer in a law p/s and rents office space to the p/s. What is the effect to George? ,!k5 Question 2Wilma owns: Video rental store 200 hours income Rental real estate 50 hours loss Acctg p/s 2,000 hours income Software consult 250 hours loss What is character of each activity  passive or active?< n8n ,Vpr8 Question 3Barbara is evaluating 3 different rental properties to acquire: Farm with 5,000 acres of land. The farmhouse would be rented out and the land rented out for cattle grazing. Barbara considers retiring there in about 10 years. Apartment building with 50 units. Mini-mall that she would construct, rent out for a few years and sell at a profit and use the money for retirement. Which is the better investment. B has 3 partnership interests that all produce PALs.L@7qUq@7UB(Passive activity deduction :Define per 1.469-2T(d) NOT PADs: Portfolio expenses Nonpassive activity interest expense Loss from disposition of property producing portfolio income Triggered loss under 469(g) State, local, foreign income taxes Misc. itemized deductions Charitable contribution deduction NOL or Capital loss c/f Casualty or theft loss if not of type that recur regularly in the conduct of the activity (EX  shoplifting in a store) Negative 481(a) adj if attributable to passive activity Loss from dispositions of PA Also consider 12-month lookback rule ^!PP%PP!%  P uYC)PALOnce know the excess of PAD over PAGI (the  PAL ) you allocate it to loss activities using the allocation rules When a PAL carries forward, it must always be attached to an activity -1T(f)(2) Form 8582 and worksheetsASelf-charged ruleTRA86 Blue Book page 233  234 1.469-7 Only applies to interest (although legislative history implied could be broader) Addresses issues where same debt produces portfolio income and PAD EX  lending transaction between individual and his partnership6(Q(QBSelf-charged exampleRPartnership AB A B AB operates a rental activity A loaned $50K to AB at 10% interest So, A receives $5K portfolio income and has $2.5K interest expense on his K-1 Under self-charged rule, A can treat $2.5K of his interest income as PAGI rather than as portfolio income (see example at 1.469-7(h))(PAPSx<"Spouses filing joint return -1T(j)fTreat as 1 t/p for 469 purposes Exceptions at -2T(j)(2) If stop filing MFJ PADs and PACs allocable to individual s activities for TY must be determined by taking into account items of deduction and credit attributable to individual s interest in PAs for immediately preceding TY Participation rule -5T(f)(3)6KK> =;= Publicly-traded partnerships - 1Special rule at 469(k) Added by Revenue Act of 1987, but effective as if added by TRA86 Definition:  any partnership if (A) interests in such partnership are traded on an established securities market, or (B) interests in such partnership are readily tradable on a secondary market (or the substantial equivalent thereof). &{{> Publicly-traded partnerships - 2b469 applies separately for items for each PTP Can t offset loss of a PTP against anything other than income of a PTP (but not its portfolio income) 469(i) doesn t apply to PTP s rental activities 469(g) only applies to PTP if partner sells his entire interest in the PTP Special reporting on Form 8582 6/f/fE-Disposition of interest in passthrough entity..& 1.469-2T(e)(3) If sell p/s interest  allocate among the passive activities, businesses and investments of the partnership as if the p/s had sold its assets P/S may report the information on its K-1 to help the selling partner Details and examples in regs>ktG!Intro to carryover of PAL and PAC"1.469-1(f)(4) For any activity for which any deductions or credits are disallowed under 469, disallowed loss or credit is allocated among T s activitys for succeeding TY in a manner that reasonably reflects extent to which each activity continues the loss activity AND the disallowed loss or credit allocated to an activity is treated as a deduction or credit from the activity for the succeeding TY& HEX (1) - 1.469-1T(f)(2)IEX - continued$21,000 PAL is disallowed Allocated ratably to the activities that produced losses for the year A: $21,000 x $9,000/$25,000 = $7,500 B: $21,000 x $16,000/$25,000 = $13,440 These are the PALs that carryforward attached to an activity Reported (and computed) using Form 8582, A/(* :=?DW#X$Y%Z&['\(])^*`+a,c-e.h/l0m1n2p3t56789:;<=>?@ABCD   0` 3333ff3` 3333f33ff3` "3333̙ff3` Kf3̙` &e̙3g3f` f333̙po7` ___f3̙;/f9` ff3Lm` ff3LmNLm>?" dd@*?nAd@q<nAqFLK#M n?" dd@   @@``PR    M`2p>> p(    HxA? ?" `} A X Click to edit Master title style!!  @  HdA? ?" ` A RClick to edit Master text styles Second level Third level Fourth level Fifth level!    S    60A #" `] `} A \*     6XA #" ``  A V*      6ܥA #" `] `} A V*      C @ABCDE FjJ@3"0`B  s *DjJ"0 `0H  0޽h ? ___f3̙;/f9___PPT10i.  +D=' A= @B + Edge  0  (     HA? ?"@  X Click to edit Master title style!!    H.? ?"   [#Click to edit Master subtitle style$$    6d #" `] `}  \*     6eA #" `]}   V*      6 #" `] `} A V*      C @ABCDE F8c@3"@B  s *DjJ"  ,$ 0H  0޽h ? ___f3̙;/f9___PPT10i.  +ityD=' A= @B + 0 2*0(  0 0 0<ʟ P%   >*  0 0ϟ  %  @* d 0 c $ ?(K   0 0Hӟ  0)  RClick to edit Master text styles Second level Third level Fourth level Fifth level!     S 0 6Dٟ P   >*  0 6ޟ    @* H 0 0޽h ? 3380___PPT10.ޔ:_ 8(    0 P%  0 >*   000  % 0 @*   6,70 P  0 >*   6:0   0 @* H  0޽h ? 3380___PPT10.0  0  0(  x  c $P @  x  c $    H  0޽h ? 3380___PPT10.ŔF;$ = 0 p $(  r  S   `}   r  S ޟ `  H  0޽h ? ___f3̙;/f980___PPT10.=zjԇ$ # 0 p$(  r  S  `}   r  S  `0  H  0޽h ? ___f3̙;/f980___PPT10.C +Տ$ > 0  $(  r  S 7 `}   r  S p8 `  H  0޽h ? ___f3̙;/f980___PPT10.yP&D$ $ 0 $(  r  S k `}   r  S   `  H  0޽h ? ___f3̙;/f980___PPT10.H!>$ 8 0 0 $(  r  S   `}   r  S  `  H  0޽h ? ___f3̙;/f980___PPT10.y`uŏ:  0 :(  r  S  `}     S Lj `  "hu=H  0޽h ? ___f3̙;/f980___PPT10.R: 6 0 :(  r  S ` `}     S  `  "hu=H  0޽h ? ___f3̙;/f980___PPT10.jy`b$ % 0 $(  r  S ʣ `}   r  S @ˣ `  H  0޽h ? ___f3̙;/f980___PPT10.Qp : & 0 @:(  r  S \ۣ `}     S Hǣ `  "hu=H  0޽h ? ___f3̙;/f980___PPT10.uP)O: : 0 :(  r  S  `}     S  `  "hu=H  0޽h ? ___f3̙;/f980___PPT10.hy`T$  0 P$(  r  S  `}   r  S  `  H  0޽h ? ___f3̙;/f980___PPT10.u@E$  0 p$(  r  S D `}   r  S  `  H  0޽h ? ___f3̙;/f980___PPT10.vp::  0 ,:(  ,r , S ,! `}  !  , S  ` ! "hu=H , 0޽h ? ___f3̙;/f980___PPT10.y`Mh#: ' 0 0:(  0r 0 S ! `}  !  0 S  ` ! "hu=H 0 0޽h ? ___f3̙;/f980___PPT10.y@Zjp$ * 0 P$(  r  S "! `}  ! r  S "! ` ! H  0޽h ? ___f3̙;/f980___PPT10.$ + 0 p$(  r  S 5! `}  ! r  S 5! ` ! H  0޽h ? ___f3̙;/f980___PPT10.p$ , 0 $(  r  S C! `}  ! r  S C! ` ! H  0޽h ? ___f3̙;/f980___PPT10.K: - 0 :(  r  S I! `}  !   S dO! ` ! "hu=H  0޽h ? ___f3̙;/f980___PPT10.@g$ . 0 $(  r  S Z! `}  ! r  S [! ` ! H  0޽h ? ___f3̙;/f980___PPT10.~$ < 0  $(  r  S i! `}  ! r  S j! ` ! H  0޽h ? ___f3̙;/f980___PPT10.Dz8 2 / 0 2(    S p! `}  ! r  S r! ` ! H  0޽h ? ___f3̙;/f980___PPT10.PL6$ 0 0 $(  r  S (! `}  ! r  S ! ` ! H  0޽h ? ___f3̙;/f980___PPT10.Y2 1 0 02(    S  ! `}  ! r  S  ! ` ! H  0޽h ? ___f3̙;/f980___PPT10.{2$ 2 0 P$(  r  S ! `}  ! r  S ԩ! ` ! H  0޽h ? ___f3̙;/f980___PPT10.`h: 3 0 p:(  r  S ! `}  !   S ,]! ` ! "hu=H  0޽h ? ___f3̙;/f980___PPT10.p1': 5 0 :(  r  S ! `}  !   S ! ` ! "hu=H  0޽h ? ___f3̙;/f980___PPT10.U$ ( 0 $$(  $r $ S ! `}  ! r $ S ! ` ! H $ 0޽h ? ___f3̙;/f980___PPT10.xiR$ ) 0 ($(  (r ( S ! `}  ! r ( S ! ` ! H ( 0޽h ? ___f3̙;/f980___PPT10.xpk$ ? 0 $(  r  S X! `}  ! r  S 0! ` ! H  0޽h ? ___f3̙;/f980___PPT10.jy_ 7 0 ~v (  r  S ! `}  ! r  S ! ` ! LB  c $DLB  c $Dp   0l!0 950%0 2  0$!` G 950%0 2H  0޽h ? ___f3̙;/f980___PPT10.kyjh$ @ 0 ` $(   r   S $ " `}  " r   S  " ` " H   0޽h ? ___f3̙;/f980___PPT10.P$$ A 0 p$(  r  S " `}  " r  S " ` " H  0޽h ? ___f3̙;/f980___PPT10.byPΛ$ B 0 $(  r  S @" `}  " r  S " ` " H  0޽h ? ___f3̙;/f980___PPT10.by0$ 9 0 P $(  r  S #" `}  " r  S `$" ` " H  0޽h ? ___f3̙;/f980___PPT10.y6[$ C 0  $(  r  S X." `}  " r  S 0/" ` " H  0޽h ? ___f3̙;/f980___PPT10.>z D 0   "'(  r  S 7" `}  "   `t ' #"" `t "  <="?SM `t Q ($21,000)  M  <H"?F M St N$4,000M  <Q"?: M F t Q ($16,000)  M  <J"?-M : t P($9,000)  M  <["? M -t WNet income (loss)M  <L"?S `M  P(44,000)  M  <,s"?F SM  O(8,000)M  <{"?: F M  P(20,000)  M  <"?- : M  P(16,000)  M  <"?  -M  P Deductions  M  <L"?S`  O$23,000M   <0"?F S  O$12,000M   <T"?: F  N$4,000M   <x"?-:  N$7,000M   <x"? -  R Gross income  M   <"?S` MTotalM  <"?F S R Activity C  M  <"?: F  R Activity B  M  <,"?-:  R Activity A  M  <"? - e (all are passive activities)M`B  0o ? `ZB  s *1 ? `ZB  s *1 ?  ` ZB  s *1 ? M `M `B  0o ? t`t`B  0o ?  tZB  s *1 ?--tZB   s *1 ?: : tZB ! s *1 ?F F tZB " s *1 ?SSt`B # 0o ?``tH  0޽h ? ___f3̙;/f980___PPT10.>z B$ ; 0  $(  r  S 0Z `}   r  S Z `  H  0޽h ? ___f3̙;/f980___PPT10.?z`]mg 0  (  ^  S 0(K     c $H0 0)    H  0޽h ? 3380___PPT10.A" 0 0 (   ^   S 0(K   "   c $$0 0)T  "<4___PPT9 B" H   0޽h ? 3380___PPT10.t0e& 0 ~`(  ^  S 0(K   $x  c $t$0 0)  $ H  0޽h ? 3380___PPT10.uk ' 0 ~ (   ^   S 0(K   $x   c $H"$0 0)  $ H   0޽h ? 3380___PPT10.vУk$* 0 44(  4^ 4 S 0(K   $ 4 c $8'$0 0)  $ *P H 4 0޽h ? 3380___PPT10.{A  0 ~(  ^  S 0(K   $x  c $<$0 0)  $ H  0޽h ? 3380___PPT10.(0  0 ~(  ^  S 0(K   $x  c $\B$0 0)  $ H  0޽h ? 3380___PPT10.9! 0 ~(  ^  S 0(K   $x  c $pH$0 0)  $ H  0޽h ? 3380___PPT10.` 0 zr` 0 (  0X 0 C 0(K   0r 0 S <00 0)  0 H 0 0޽h ? 3380___PPT10.Pz5G 0 zrp 4 (  4X 4 C 0(K   &r 4 S &0 0)  & H 4 0޽h ? 3380___PPT10.PzБ9H 0 zr 8 (  8X 8 C 0(K   0r 8 S \v00 0)  0 H 8 0޽h ? 3380___PPT10.PzP0:r@#Ν*~- 30d@:l+H:f9F Wes "$&(*$,.P02$ 5P7)97;p[=rti?vx ,AD8FXHR J LNPRTVXZ\^I  ` Oh+'0l hp    ,4 IRC 469 Passive ActivitiesAnnette NellenEdgeAnnette Nellen76Microsoft Office PowerPoint@E^@`JŔ@0APzG0g  h h &WMFClx EMFzQr F(GDICx!b $$==% % V0xx x % % $$AA" FGDICF(GDICrlvFGDICRp@GaramondAGaramo8_&p.@Garamo 0 A@AO0QܪA%0HA@AA,A$&t"mQ@"@AQpAAdv%    TTps0 B BsLP1$ % ( F(GDIC &!b : $$==_888"̙% % W(1NNN N% % $$AA( : " FGDICF(GDIC"DF!b $$==_888̙% % W$ CG#NB N% % $$AA( " FGDICF(GDIC:FGDICRp@GaramondAL&A.QAXA&@A@AȲAAȲA@Al<*"Q&0Al$@A%0HA A A܀ 0s& A @A  Q@ApAXAdv%    f3Td%(0 B B&LTIRC  % ( Rp@ArialndAA@Al<*"Q&0Al$@A%0HA A A܀ 0s& A@A  Q@A%0ApAXAdv AB\"^,v(dv%    f3TT&+(0 B B&&LP  % ( Rp@GaramondA%0HA A A܀ 0s& A@A  Q@A%0ApAXAdv AB\"^%0Adv AB"^8 ,v(dv%    f3Td,>(0 B B,&LT469  % ( Rp@GaramondAA%0ApAXAdv AB\"^%0Adv AB"^8 %0(Adv AB"^P ,v(dv%    f3TT?D(0 B B?&LP ' % ( Rp@GaramondA%0Adv AB"^8 %0(Adv AB"^P %0ȭAdv AB"^x,v(dv%    f3TH(0 B BH&LpPassive Activities % ( Rp@GaramondAGaramo 0p.@Garamo 0 A@AO0QܪA%0HA@AA,A$&t"mQ@"@AQpAAdv%    f3TpF*^50 B BF3LXPart 3 % ( F(GDIC"DeFGDICRp@ArialAAArialp.@Arial 0 A@AO0QܪA%0HA@AA,A$&t"mQ@"@AQpAAdv%    T;HzM0 B B;MLxPAGI, PAD, PAI, PAL ! % (   x--$xx--'@Garamond?A-.  2 s1."SystemMS Shell Dlg-̙-- % % --'̙--%"EE--'@Garamond?A-. f3 2 &IRC .-@Arialnd?A-. f3 2 &&.-@Garamond?A-. f3 2 &,469 .-@Garamond?A-. f3 2 &?.-@Garamond?A-. f3"2 &HPassive Activities.-@Garamond?A-. f32 3FPart 3.-@ArialA?A-. '2 M;PAGI, PAD, PAI, PAL !.-՜.+,0    COn-screen Showa&&' +Arial GaramondTimes New Roman WingdingsEdge%IRC 469 Passive Activities Part 3PAL General RulePAL, PAGI, PAD and relevancePALWhat is PAGI? 1.469-2T(c)Portfolio income PAGI QuestionsMore PAGI QuestionsPAGI disposition gain rules'Classification of disposition gain - 1'Classification of disposition gain - 2Disposition QuestionDisposition Question;Income recharacterization rules -2T(f) and -2(f) SET 1:Income recharacterization rules -2T(f) and -2(f) SET 2.Authority for income recharacterization rulesSPA -2T(f)(2) SPA Example*Rental of self-developed property (f)(5);Self-rented property rule (f)(6) (self rental rule)"Self-rental rule upheld by courts*Rental of nondepreciable property (f)(8)*Equity-financed lending activities (f)(4);Passthrough entities licensing intangible property (f)(7) Question 1 Question 2 Question 3Passive activity deduction PALSelf-charged ruleSelf-charged example#Spouses filing joint return -1T(j)!Publicly-traded partnerships - 1!Publicly-traded partnerships - 2.Disposition of interest in passthrough entity"Intro to carryover of PAL and PACEX (1) - 1.469-1T(f)(2)EX - continued  Fonts UsedDesign Template Slide Titles&&_aAnnette NellenAnnette Nellen  !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}~Root EntrydO)Current UserSummaryInformation(PowerPoint Document(aDocumentSummaryInformation8