The IRS has provided a three-month extension of time to file and pay tax for individuals who were affected by the Boston Marathon explosions that occurred on April 15, 2013.  Those affected include persons who were participating in the race as well as spectators.  The closure of streets after the explosion to allow investigation and pursuit of suspects disrupted business activity in the area and potentially the ability of some taxpayers and return preparers to access their files.

The following was released by the IRS last week.  Be sure you take the time to review these facts to protect yourself.

The Internal Revenue Service today issued its annual “Dirty Dozen” list of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

Passive Business Activity

Internal Revenue Code Section 469

The passive activity loss rules have developed into a complicated set of guidelines since their inception.  If you keep in mind the and have a general understanding of the principles that drive loss limitations in this area, you will have a good foundation for selecting investment strategies that allow you to take full advantage of the passive activity rules.

Here is a basic breakdown of the rules and how they may relate to you.

What is a passive activity?