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Article Date:
October 2016

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Q&A: Does Grouping Release Prior Suspended Losses?



I am a CPA who got a new client today. She is a top real estate broker in my city.


She has an S corporation through which she reports all her real estate brokerage and sales activities. In reviewing her personal return filed jointly with her husband, I noticed that she has five rental properties reported on Schedule E.


Her prior CPA classified the rental properties as passive activities, and she has suspended passive losses of $72,000.


We are going to file her current-year tax return. I know she definitely qualifies as a “real estate professional” for her rental properties. Here are my questions:



Can I elect to group all five rental properties to make the 750-hour threshold easy to attain for 2015?


If she qualifies as a real estate professional, can I deduct the prior years’ $72,000 in suspended passive losses so as to reduce her current-year taxable income? ... Log in to view full article.

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