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.

2 Schedule E in the Real World Presented by: Kathy Hettick, EA, ABA, ATP, RTRP Gene Bell, EA, ATA, CFP®, RTRP National Society of Accountants 1010 N. Fairfax Street Alexandria, VA

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.

4 Schedule E Hot Issues! Disclosing Form 1099s Vacation / Short-Term Rental Qualified Joint Venture Self Rental Net Investment Income Tax!

5 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

6 Why do we have a Schedule E? IRC §469 Tax Reform Act of 1986 Passive Activities At-Risk Rules Pass-Through Entities

7 Practice Management Tip Have a Process Have Procedures Do Your Due Diligence Ask The Right Questions

8 What’s New? –Lines A & B 1099 Mystery –Line 1 Ask first! There is a code Schedule E Page 1

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10 Schedule E Page 1 What’s New? –Lines A & B 1099 Mystery –Line 1 Ask first! There is a code

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12 Schedule E Page 1 –Line 2 Fair Rental Days Personal Use Days Qualified Joint Venture?

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14 Vacation Home Short Term Rental IRC §280A 14 Day Rule Reporting Income Allocation of Expenses –9 th and 10 th Circuit Court Rulings

15 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?

16 Passive Activities Non-passive Activities Real Estate Professionals –Rev Proc Exceptions – of course! Passive Activity Loss Rules

17 Self-Rental! Know and Understand the Rules Income is Non-Passive Income Losses are Passive –Court Cases Carlos v.Comm Sidell v. Comm

18 Schedule E Income or Loss More Detail Line 3 - Form 1099-K – Dropped? Line 4 – Change from 2011 Line 23! –Reconciliation of Amounts Reported

Schedule E

2012 Schedule E

21 Schedule E Income 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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24 Schedule E Page 2 Part II –Income or Loss from Partnerships –Passive vs. Non-Passive –Loss Rules - Basis, Basis, Basis –Unreimbursed Expenses - UPE

25 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”

26 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

27 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 Reasonable Been Prudent Been Ethical Asked the Right Questions 28

Upcoming Webinars presented by Kathy Hettick & Gene Bell November 14 th : 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