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Passive Activity Loss Audit Technique Guide (ATG) - Table of Contents

Publication Date - December, 2004

NOTE: This guide is current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of this document, no guarantees are made concerning the technical accuracy after the publication date.

This Audit Techniques Guide (ATG) is presented in several chapters. These chapters can be accessed and then printed by following the links in the Table of Contents below. To print the entire ATG please refer to the PDF version.

Table of Contents


  • A Quick Look Inside!

Chapter 1: Overview

  • Introduction
  • Types of Passive Activities
  • What is Passive
  • Activity Rules
  • Participation Rules
  • Form 8582
  • Summary
  • Exhibit 1.1: Case Law and Ruling
  • Exhibit 1.2: Form 8582- Line by Line Comment
  • Exhibit 1.3: Common Issues

Chapter 2: Rental Losses

  • In a Nutshell
  • The $25,000 Allowance In a Nutshell
  • Active Participation Sub-Issue
  • Modified Adjusted Gross Income Sub-Issue
  • The $25,000 Allowance Supporting Law
  • Exceptions to Rental Definition
  • Real Estate Professional In a Nutshell
  • Real Estate Professional
  • Material Participation for Real Estate Pros
  • Election to Group Rental Real Estate
  • Real Estate Pro: Law
  • Equipment Rentals In a Nutshell
  • Equipment Leasing Supporting Law
  • Vacation Rental In a Nutshell
  • Material Participation Sub-Issue
  • Summary
  • Exhibit 2.1: Rental Decision Tree
  • Exhibit 2.2: Modified Adjusted Gross Income Computation
  • Exhibit 2.3: Rental Real Estate Losses: Active Participation
  • Exhibit 2.4: Real Estate Professional
  • Exhibit 2.5: Real Estate Professional- Interview
  • Exhibit 2.6: Equipment Rentals
  • Exhibit 2.7: Vacation Rentals/Condos/B&Bs/Hotels

Chapter 3: Passive Income

  • In a Nutshell
  • Passive Income
  • Supporting Law
  • Self-Rental Income
  • Lease Land
  • Land Held for Investment
  • Supporting Law
  • Summary
  • Exhibit 3.1: Passive Income
  • Exhibit 3.2: Self-Rental Property- Income Recharacterization
  • Exhibit 3.3: Passive Income Decision Tree

Chapter 4: Material Participation

Chapter 5: Dispositions

Chapter 6: Entity Issues

Chapter 7: Interaction with other IRC Sections

Chapter 8: Activities (Grouping Rules)

Chapter 9: Credits

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Page Last Reviewed or Updated: 08-Nov-2016