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Page 18 THE MALDEN ADVOCATE–Friday, October 27, 2023 MUSINGS | FROM PAGE 6 PASSIVE ACTIVITY LOSSES T he passive activity loss rules limit the ability of taxpayers to offset salaries, interest income, dividend income, self-employment income, passthrough income generated from active activities such as limited liability companies and S Corporations, lottery winnings, capital gain income, royalty income, pension income, IRA distributions and social security income with losses from passive activities, which are trades or businesses in which the taxpayer does not materially participate. Under the passive activity loss provisions, a taxpayer can only offset passive activity losses against passive activity income. Any disallowed passive activity loss can be carried forward to the next calendar year in order to be offset against passive activity income that might be applicable for that next calendar year. In the event there is no future passive activity income available to offset the passive activity losses against, if the passive activity is subsequently sold, all unused passive activity losses can then be deducted in full in the year of sale. Tax credits from a passive activity can only be utilized to offset income taxes associated with that passive activity. Any excess tax credits must then be carried forward to be offset against future income taxes associated with future passive activity income. The passive activity loss rules also apply to rental real estate. Taxpayers are allowed to deduct up to $25,000 per year in rental losses to be offset against all other income such as wages, interest income, dividend income, capital gain income, etc. The taxpayer must materially participate in the rental real estate activity. The deduction begins to be phased out once modified adjusted gross income (MAGI) reaches $100,000. The deduction is completely phased out once MAGI reaches $150,000. These thresholds apply for both single taxpayers and married filing joint taxpayers. IRS Form 8582 is used to report passive activity income and losses. Any rental losses in excess of $25,000 will be carried over to future years. For each piece of rental real estate that you own, you must keep track of the unused rental losses that are carried over each year. If one of the rental properties is later sold, any unallowed rental losses will be fully deductible in the year of sale. Some taxpayers qualify as a real estate professional. In order to qualify, the taxpayer must work at least 750 hours per year in a real estate trade or business and more than 50% of the taxpayer’s total hours worked during the year must be in a real estate trade or business. There is no limit on the amount of rental loss a real estate professional can deduct on his or her tax return unless the taxpayer is subject to the excess business loss limitations as set forth in the Tax Cuts and Jobs Act of 2017. Material participation in rental real estate activities is generally achieved by electing to aggregate all of your rental activities as one activity and demonstrating that you have worked at least 500 hours during the year in this one activity. It is often very confusing for taxpayers when they receive K-1 forms from real estate investment trusts and limited liability companies reporting losses. The K-1 forms may report that the partner is a limited partner, thereby indicating no active participation. This would result in the interest being deemed a passive activity. Those losses can only be offset against other passive income. If there is no other passive income, the losses cannot be offset against any non-passive income as mentioned above. As a further note, if that same passive activity reports a large capital gain on the K-1 form as well as a rental real estate loss or ordinary business loss, the rental real estate loss and ordinary business loss cannot be offset against the capital gain, as the partner simply does not actively participate in the entity, and the capital gain is not considered passive income. Joseph D. Cataldo is an estate planning/elder law attorney, Certified Public Accountant, Certified Financial Planner, AICPA Personal Financial Specialist and holds a master’s degree in taxation. were most in the Jenkins that day, Stevie being one of the biggest recording artists of the day and already on his way to becoming an icon. We wanted it to last forever; it certainly does in all our memories, but Mr. Boyle finally took the stage and announced (and I quote), “Mr. Wonder, the boys and girls have to get back to class.” Ronnie Fales’ daughter Tammi reached out to me recently, making a case for her pops MHS Sports Hall of Fame nomination. She makes a compelling argument for the next time the committee meets: “I know his situation is different because his parents voluntarily held him back at Browne Junior High so he could take part in a new course of studies they were introducing. Unfortunately, it ended up making him ineligible for his senior year. However, I have heard over the course of my lifetime from a lot of guys his age who are already inducted including John Salmon who was a good friend is what a outstanding athlete my father was and what he accomplished by his junior year was amazing. In addition, his connection and dedication to the community has never stopped. He worked servicing the business machines at the high school as his regular job and then when that company closed, he became a head janitor I believe at the Forestdale and now in retirement he’s working with special needs children as a para. He stayed involved in Malden Pop Warner and Malden Youth Hockey for 25ish years combined. So anyway, I obviously think he deserves it.” Ten musings from the immensely creative pencil of the late John O’Brien whose wit and wisdom endeared him to generations of MHS students, Maldonians and faculty at MHS those many years ago. Here are 10 of my favorite witticisms from his iconic “Musings” columns: 1. “A Russian napkin is a Soviet serviette.” 2. “Ex-streakers are over baring.” 3. “In a conservative bookstore, the customer is always right.” 4. “A crab apple a day keeps the psychiatrist away.” 5. “Bikinis: you have to draw the line some wear.” 6. “When she brought the T.V. Guide to bed, I knew our prime time was dead.” 7. “Well, Bud, wiser men than you drink beer.” 8. “Carson for the vulgar, Paar for the coarse.” 9. “Only a chump chomps like a chimp, champ.” 10. “Fish gotta swim, birds gotta fly, oil gotta spill, I gotta cry.” As Peter Falk’s iconic TV character Columbo would say, “Just one more thing, sir” – why vote for Julie Willcox Turner for Ward 5 Councillor? I’ll let my dear friend Jackie Bouley explain why (she’s so good with words!): “To put it simply, Julie is the real deal. Her dedication to family and community speaks for itself. Ask anyone who knows her, she is a loyal, genuine person. As a lifelong resident of Malden, a wife, and a mother of two young boys, she prides herself on helping people, regardless of race, religion, political or personal beliefs. Julie is running for city council because she wants to be a strong representative for her ward. She wants to be an advocate for those that otherwise may not know how to get the resources and help they need, no matter the circumstance. She will dedicate herself to working for you and working with the city council to get the job done. When Julie told me she was running, I asked her why she wanted to run. Without hesitation, she told me she wanted to make a difference and bring balance to the city council. I know she is the right candidate, and even though I live in Ward 3 and can’t vote for her, the next best thing I can do is give her my support and tell people she is the right choice for Ward 5. Of this, I have no doubt. In a city as big as Malden, it’s unfortunate that the voter turnout is not greater, but it is vital that we exercise that right. Every vote counts, and your vote can make a significant difference!” Postscript 1: I know, you yearned for more questions asked and more questions answered by Julie. Ask and thou shall receive faithful readership – Julie Part 2: What one thing would people be surprised to learn about you? I love to read. I don’t sit still often so you wouldn’t think so, but I love to learn. So, if you see me with EarPods in I’m probably listening to an audiobook on the go. • Where would you most like to buy a one-way ticket to? Honestly, I love to travel but there is nothing better than getting home. So, I’ll take a two-way ticket to Ireland please! • What person, alive or dead, would you like to eat dinner with? My Grandmother Eunice. • What’s one song to play to put yourself in a good mood? Bob Marley – Three little birds. • What is the one piece of advice that most changed your life? When you want something work hard for it and don’t stop until you get it! • What one piece of advice would you give your younger self? Slow down! Enjoy being young and carefree! • What’s the one thing that keeps you motivated? My kids! • What’s the one thing you want to be remembered for? Being someone that always showed up for you, good or bad! • Growing up in Malden – most admired or most inspirational mentor? I have been blessed with so many amazing people throughout my life, but my older brother Dennis takes the cake! • Growing up what were your favorite places to grab a slice of pizza, a sub, or a hamburger? The Roadside Tavern (currently the 621) and Maria’s Pizzeria! Postscript 2: Oh, by the way, did I mention that Julie’s nephew Jake (Willcox) is the starting quarterback for the Brown (University) Bears and (last week) was named the Gold Helmet winner by the New England Football writers for the second time this season? Postscript 3: Speaking of music, straight from the Classical period in ancient Greece, Plato wrote, “music is a moral law. It gives soul to the universe, wings to the mind, flight to the imagination, and charm and gaiety to life and to everything.” Like us on Facebook advocate newspaper Facebook.com/Advocate.news.ma

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