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Phillip B, EA
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 704
Experience:  Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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Attached is response I received from a posting. I need help

Resolved Question:

Attachment: 2013-07-27_080215_posting.doc

Attached is response I received from a posting. I need help responding to another student. The highlighted information is her posting. Following is my response. However, I am unsure howto respond to her question regarding at-risk limits.

Submitted: 3 years ago.
Category: Tax
Expert:  Phillip B, EA replied 3 years ago.
Thanks for using JustAnswer.com! I will do my best to provide you with a clear and concise answer to your tax question.

At-risk limits apply to any taxpayer who is somehow shielded from losing money (by using some form of non-recourse financing) in an investment regardless of whether the taxpayer is a individual, partnership, or a corporation. It is rare that at-risk limits apply to individuals (because non-recourse financing is not easy to get) but the limits can apply to any and all taxpaying entities who have financed their investment with non-recourse financing.

Special loss allowance only applies to taxpayers who are in the business of renting residential real estate. Real estate rentals are always considered passive activities, but the special loss allowance applies if:

1.) Taxpayer owns 10% or more of the rental property
2.) The taxpayer is actively engaged in the management of their rental property

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