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Real Estate Professionals Granted Extra Time to Make a "Single Activity Election"

Posted by attorney Henry Lively

The Internal Revenue Service announced that they will grant extra time to taxpayers that have rental property to make a "Single Activity Election" as provided in the Revenue Procedures. These taxpayers are allowed to make an election to treat their rental properties as a single activity. (Rev Proc 2011-34)

In recent years, the Internal Revenue Service has granted relief to taxpayers on a private level when they failed to make a timely election to treat their rental activities as a single activity. The 2011 Revenue Procedure allow all taxpayers that meet certain requirements to be granted relief without the need for a Private Letter Ruling. However, if a taxpayer does not qualify for relief under the Revenue Procedure, they may still request a Private Letter Ruling.

To qualify for relief the Taxpayer must represent in a statement under penalty of perjury that he or she:

  • Failed to make the election solely because he or she failed to timely meet the requirements
  • Filed consistently for all relevant tax years as if he or she had made an election
  • Timely filed each return that would have been affected by the election, and
  • has a reasonable cause for failure to meet the requirements in Treas. Regs. Secton 1.469-9(g).

The late election is made by filing an amended tax return and attaching the statement.

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