11) One of the requirements which must be met for stock to be considered Section 1244 stock is that the corporation cannot have more than $10 million of total paid in capital as of the stock issuance.
12) When applying the limitations of the passive activity rules, a taxpayer's AGI is classified into active income, portfolio income and passive income. For this purpose, portfolio income includes dividends, interest, annuities, and royalties.
13) Losses from passive activities that cannot be deducted currently are carried over for up to 5 subsequent years.
14) Individual taxpayers can offset portfolio income with passive losses.
15) If a taxpayer disposes of an interest in a passive activity, unused carryover losses are available to the purchaser of the interest.
16) A taxpayer may deduct suspended losses of a passive activity when the taxpayer completely terminates his or her ownership of the activity.
17) Once an activity has been classified as passive, it is considered passive with regard to that taxpayer until it is sold.
18) A passive activity includes any rental activity or any trade or business in which the taxpayer does not materially participate.
19) Two separate business operations conducted at the same location may be treated as separate activities under the passive activity rules.
20) Partnerships and S corporations must identify their business and rental activities by applying the passive activity rules at the partnership or S corporation level and then must report the results of their operations by activity to the partners or shareholders.