Tuesday, June 18, 2013

Individuals Limited by S Corporation Loss Limitation But Not Passive Loss Limitation

Interesting tax update from the CCH blog:

Individuals Limited by S Corporation Loss Limitation But Not Passive Loss Limitation; Testimony Established Wife Materially Participated; Late-Filing Penalty Applied (Montgomery, TCM)

An individual materially participated in the activities of a limited liability company (LLC) that she and her husband started and for which both taxpayers performed services. Therefore, her claimed share of a net operating loss (NOL) was not precluded on the ground that she was engaged in a passive activity. However, the taxpayers’ claimed loss from their S corporation was limited and their guarantee of a debt owed by that company did not affect that limitation. They were also subject to an addition to tax for the late filing of their return.

The wife participated in the LLC for more than 500 hours during the year at issue, and her participation was regular, continuous, and substantial. Although only the wife was a member of the LLC, the activities of her husband were also taken into account to determine participation. Daily time reports and other logs were not required to establish participation because the taxpayers testified credibly as to their activities in founding the company, negotiating contracts, hiring employees and conducting daily business. As a result, the wife’s share of the construction company’s loss was not a passive loss under Code Sec. 469 and the taxpayers were entitled to claim the NOL.

Read the entire post here.

Wednesday, June 5, 2013

Reasonable Accommodations and Live-In Aides

The Fair Housing Act requires landlords to make "reasonable accommodations" in their rules, policies, practices, or services, when such accommodations may be necessary to afford a disabled tenant or prospective tenant equal opportunity to use and enjoy a dwelling. The tenant may make the request at the time the tenant first rents or after the tenancy has begun.

One common reasonable accommodation request occurs when a disabled tenant asks a landlord to allow a permanent live-in aide to live in his or her unit and assist with daily activities such as cooking, bathing, or administering medicine. This request can be evaluated on a case-by-case basis by asking some of the following questions:
  • Is this request reasonable? It might be if the unit can accommodate an additional person living there without creating a safety risk. It might not be if the proposed live-in aide does not meet the landlord's tenant selection criteria or violates provisions in the resident's lease.
  • Is the live-in aide necessary? The tenant’s disability and related need for a live-in aide should be well-documented. Landlords may also determine if the requested live-in aide is qualified, was not part of the tenant's household, and is legitimately there to serve as an aide.
  • Will accommodating the request provide the tenant equal opportunity to use or enjoy the property? This language addresses the extent of the accommodation; permitting the live-in aide must allow the tenant to use the property as equally as other tenants - not more or less.
Landlords should be prepared for a tenant to request a live-in aide and should train their staff to evaluate and respond to the request. Failing to respond correctly can expose the landlord to a lawsuit under the Fair Housing Act.

Monday, June 3, 2013

Fair Housing Act: Reasonable Accommodations

The federal Fair Housing Act outlaws discrimination in housing, including discrimination based on disability.  The law prohibits housing providers from discriminating against 1) a disabled buyer or renter; 2) a prospective disabled buyer or renter; or 3) a disabled person associated with that buyer or renter. 42 USC § 3604(f)1.

The law also requires housing providers to “make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling.” 42 USC § 3604(f)3(b).  For example, a landlord that does not permit pets must allow a blind tenant to have a guide dog, and an apartment complex with unassigned parking places must reserve a spot close to the building for a tenant who cannot walk.  These  accommodations are necessary to provide a disabled individual an equal opportunity to use and enjoy the dwelling.  However, housing providers can deny the accommodation request if the request is not reasonable – for instance if it causes an undue financial or administrative burden or fundamentally alters the provider’s operations.

Property managers should have an established process for evaluating reasonable accommodation requests, including a reasonable accommodation request form for tenants that can be distributed with the lease and other documents given to the tenant.  If a request is determined to be unreasonable, the landlord should explain the decision in writing and offer to discuss alternative accommodations.

For answers to more frequently asked questions about the Fair Housing Act, visit http://www.hud.gov/offices/fheo/library/huddojstatement.pdf.