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For passive activity loss limitation purposes, what have several recent court decisions indirectly indicated about a...

For passive activity loss limitation purposes, what have several recent court decisions indirectly indicated about a member of a disregarded single member LLC who is an individual? a. The individual should be treated as a limited partner when determining if the member can pass any of the material participation tests, b. The individual can never pass any of the material participation tests, c. The individual should be able to use all seven of the material participation tests, d. The individual is never subject to any of the PAL limitation rules.

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Answer #1

Answer : (a)The individual should be treated as a limited partner when determining if the member can pass any of the material participation tests.

Explanation : IRS claims that LLC owners must be treated as limited partners for purposes of the PAL( passive activity loss) rules because both limited partners and LLC owners have limited liability.

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