A recent appeal case by The Ninth Circuit, affirming a district court, held that section 469(c)(7) merely removes the per se bar for treating all rental losses as passive for a real estate professional, but it doesn’t excuse real estate professionals from showing material participation in the real estate activity to deduct rental losses.
View the court documents here: (Charles Gragg et ux. v. United States) (No. 14-16053) (United States Court of Appeals for the Ninth Circuit)
Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal