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Unformatted text preview: o PRIMARILY PERSONAL USE No rental income is included in gross income No deduction is allowed for expenses unless normally itemized o MIXED USE No net loss allowed o Allocation of Rental Expenses IRS method: allocate based on ratio of number of rental days to total days used Tax Court Method: taxes and interest allocated based on ratio of rental days to 365 • FLOW-THROUGH ENTITIES o Not taxed directly o Income flows through to partners, owners, etc o Passive income o Reported on “informational returns” o Partnership income or loss – passive activities Active (work) Passive (investments) Portfolio (rental or flow through) Can deduct passive losses to the extent of passive income (no net loss allowed) Excess losses cannot offset active or portfolio, but carry forward to future years...
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- Spring '08
- Taxation in the United States, passive income