Tax Shelters & Passive Activity Loss: Definition & Rules


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question 1 of 3

What is a tax shelter?

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1. What is the purpose of a 1031 exchange?

2. Which of the following considerations does the IRS use to define a real estate professional?

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About This Quiz & Worksheet

Use the quiz and worksheet to decipher what you comprehend about tax shelters and passive activity loss. Test your knowledge with questions on how tax shelters function and other areas of the tax code with regard to passive activity loss.

Quiz & Worksheet Goals

Use these study tools to find out how well you know how to:

  • Explain a tax shelter
  • Determine the maximum amount allowed for passive activity loss
  • Give the minimum number of annual hours a professional in real estate must work to be exempt of the passive activity loss rules
  • Recognize the income level at which a married couple jointly filing can no longer claim passive activity loss
  • Assess what would occur should a taxpayer exceed the allowable limit for passive losses in a given year

Skills Practiced

Practice the following skills:

  • Critical thinking - apply relevant concepts to examine information about tax shelters in a different light
  • Interpreting information - verify that you can read information regarding passive activity loss and interpret it correctly
  • Information recall - access the knowledge you've gained regarding the income level at which a married couple can no longer claim passive activity loss

Additional Learning

Use the lesson entitled Tax Shelters & Passive Activity Loss: Definition & Rules for more knowledge. The lesson will help you to learn the following:

  • Understand depreciation
  • Identify 1031 exchange
  • Define passive activity loss
  • Explain what makes for a real estate professional