The Passive Activity Loss (PAL) rules allow real estate professionals to elect to treat all of their interests in rental real estate as one activity [IRC Sec. 469(c)(7)]. A taxpayer is a real estate professional if : (1) more than half of the personal services performed that year are in real property trades or businesses in which the taxpayer materially participates; and (2) more than 750 hours of services during that tax year are in real property trades or businesses in which the taxpayer materially participates. The Tax Court held that a taxpayer, who owned over 28 rental apartments and who also worked as a full-time research associate for a corporation, was not a real estate professional for PAL purposes. As a result, he could not use losses from the rental activities to offset his compensation and other income. Mohammad Hassanipour , TC Memo 2013-88 (Tax Ct.).
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