Schedule E in the Real World

•All audio is streamed through your computer speakers.

• There will be several attendance verification questions during the LIVE webinar that must be answered via the online quiz at the conclusion to qualify for CPE.

• For the archived/recorded version of this webinar, the link to the attendance verification quiz is a final exam on the topics covered during the presentation.

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Schedule E in the Real World

Presented by:Kathy Hettick, EA, ABA, ATP, RTRP Gene Bell, EA, ATA, CFP®, RTRP

National Society of Accountants1010 N. Fairfax StreetAlexandria, VA 22314

800-966-6679www.nsacct.org

Learning Objective

Upon completion of this course, you will better understand the details and preparation issues of Schedule E arising from the major changes that were instituted in 2011.

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Schedule EHot Issues!

• Disclosing Form 1099s• Vacation / Short-Term Rental• Qualified Joint Venture• Self Rental• Net Investment Income Tax! - 2013

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Schedule E• Major facelift happened in 2011

– The devil is in the details!

• Unlike the Schedule D– Just a summary form now

• Check out our Schedule D webinar

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Why do we have a Schedule E?

• IRC §469• Tax Reform Act of 1986• Passive Activities• At-Risk Rules• Pass-Through Entities

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Practice Management Tip

• Have a Process• Have Procedures• Do Your Due Diligence• Ask The Right Questions

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• What’s New?– Lines A & B

•1099 Mystery– Line 1

•Ask first! There is a code

Schedule EPage 1

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Schedule EPage 1

• What’s New?– Lines A & B

•1099 Mystery– Line 1

•Ask first! There is a code

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Schedule EPage 1

– Line 2•Fair Rental Days•Personal Use Days•Qualified Joint

Venture?

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Vacation HomeShort Term Rental

• IRC §280A• 14 Day Rule• Reporting Income• Allocation of Expenses

– 9th and 10th Circuit Court Rulings

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Qualified Joint Venture• Must be Husband and Wife

• New for 2011

• Both Must Materially Participate•IRC §469-5T – yep, temporary

• Community Property State Issues• Simple Election – Is that a problem?

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• Passive Activities• Non-passive Activities• Real Estate Professionals

–Rev Proc 2011-34• Exceptions – of course!

Passive Activity Loss Rules

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Self-Rental!• Know and Understand the Rules• Income is Non-Passive Income• Losses are Passive

– Court Cases• Carlos v.Comm• Sidell v. Comm

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Schedule EIncome or Loss

• More Detail• Line 3 - Form 1099-K – Dropped?• Line 4 – Change from 2011• Line 23!

– Reconciliation of Amounts Reported

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2011 Schedule E

2012 Schedule E

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Schedule EIncome or Loss

• More Detail• Line 3 - Form 1099-K – Dropped?• Line 4 – Change from 2011• Line 23!

– Reconciliation of Amounts Reported• Net Investment Income Tax!

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Schedule E Page 2

• Part II– Income or Loss from Partnerships– Passive vs. Non-Passive– Loss Rules - Basis, Basis, Basis– Unreimbursed Expenses - UPE

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Schedule E Page 2• Part II…………………part 2

– Income or Loss From S Corporations– Passive vs. Non-Passive– Loss Rules - Basis (again)– No Such Thing as “Unreimbursed

Shareholder Expenses”

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Schedule E Page 2• Part III

– Income or loss from estates and trusts– Again with the passive and non-passive!

• Part IV– Income or loss from REMICs– Schedule Q, Form 1066

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Schedule E Page 2• Part V – Last but not Least!

– Farm rental income – Form 4835– Reconciliation of farming and fishing

income – read the instructions!– Reconciliation for real estate

professionals•IRC §469(c)(7) •Agarwal TC Summary

Practice Management Tip

Ask yourself, have you;

Been ReasonableBeen PrudentBeen EthicalAsked the Right Questions

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Upcoming Webinars presented by Kathy Hettick & Gene Bell

November 14th: Self-Rental Tax Traps-Are you in Danger? Are Your Clients?

Don’t forget to check out the archived webinars!Preparer Penalties – Are you at Risk?Schedule D in the Real World

http://webinars.nsacct.org