Many of you have heard about how the IRS has been targeting Real Estate Agents, and challenging the status of a "real estate professional" for an Agent.To give you a brief background without getting into the details - a "Real Estate Professional" is someone who "materially participates" in their real estate activity. As a result, they are able to deduct real estate losses from other income that is not related to real estate.The IRS had been challenging the "real estate professional" status for agents - stating that Brokers qualify, but Agents do not. And they were winning...The great news is that a Real Estate Agent just won in tax court! Read the case for yourself!The IRS tried to argue that the taxpayer needs to be a “Broker” not a just an “Agent” to meet the 750 hour per year material participation test. The Tax Court said: “The Court concludes that Congress is presumed to have defined the term “brokerage” in its common or ordinary meaning. The Court also stated that for purposes of section 469, the “business” of a real estate broker includes, but is not limited to: (1) Selling, exchanging, purchasing, renting, or leasing real property” and therefore, an “agent” is the same as a “broker” for purposes of this test.”Yippy!Congratulations, real estate agents can be "real estate professionals" again!
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  • I would be willing to bet that we professionals spend 10 times more in continuing ed and training classes than any member who works for the IRS. Yet they like most government workers brag about how professional they are. In addition to regular continuing ed we have classes on every new law that goes into effect radon in Jan. & now septic tank inspections for July 1st.
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