Enrolled Agent Exam [Part 2] 64, Excess Business Losses — §461(l)

Enrolled Agent Exam [Part 2] 64, Excess Business Losses — §461(l)

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - How to calculate an excess business loss using the inflation-adjusted thresholds for different filing statuses. - That any disallowed excess business loss is treated as a Net Operating Loss (NOL) carryforward to subsequent tax years. - The critical ordering rule: basis, at-risk, and passive activity loss limitations must be applied before the §461(l) limitation. - Why you must aggregate all trade or business income and losses before comparing the net amount to the annual threshold. - How the excess business loss limitation applies only to noncorporate taxpayers and is calculated on Form 461. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

Enrolled Agent Exam [Part 2] 63, Net Operating Loss (NOL) — Carryforward Rules

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - Post-2017 Net Operating Losses (NOLs) have an indefinite carryforward period but generally cannot be carried back. - The deduction for post-2017 NOLs is limited to 80% of the taxable income in the carryover year, calculated before the NOL deduction itself. - Pre-2018 NOLs follow older rules: a 2-year carryback and a 20-year carryforward, with the ability to offset 100% of taxable income. - Specific exceptions exist, such as a 2-year carryback for certain farming losses, which are common exam trick questions. - Use the mnemonic "After '17, NOLs go on for infinity, but they're only eighty percent mighty" to remember the indefinite carryforward and 80% limitation for post-2017 NOLs. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

Enrolled Agent Exam [Part 2] 62, Home Office — Simplified vs Actual Method

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - The simplified home office deduction is calculated at $5 per square foot, with a maximum of 300 square feet, capping the deduction at $1,500. - The actual method requires calculating the business-use percentage of the home to deduct a pro-rata share of indirect expenses like mortgage interest, utilities, and depreciation. - A taxpayer can choose between the simplified and actual methods each year, as it is an annual election. - Unused home office deductions due to income limitations can only be carried forward to future years under the actual method; there is no carryover with the simplified method. - A key exam topic is depreciation recapture upon the sale of the home, which only applies when the actual method was used, as the simplified method does not involve a depreciation deduction. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

Enrolled Agent Exam [Part 2] 61, Home Office Deduction — Exclusive and Regular Use

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - The Home Office Deduction requires passing both the "regular use" and strict "exclusive use" tests. - To qualify, the home office must be the principal place of business, a location for meeting clients, or a separate, unattached structure. - The exclusive use test is waived for licensed daycare providers and for the regular use of a space for storing inventory or product samples. - Under §280A, the deduction is limited by the gross income from the business and cannot create or increase a net loss. - Any disallowed home office deduction due to income limitations can be carried forward to subsequent tax years.

Enrolled Agent Exam [Part 2] 60, Vehicle Expenses — Standard Mileage vs Actual

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - The standard mileage rate offers simplicity, while the actual expense method requires detailed record-keeping of costs like gas, insurance, and depreciation. - The first-year choice is critical: using the standard mileage rate initially allows you to switch to the actual method later, but choosing the actual method first (with accelerated depreciation) prevents you from ever using the standard rate for that car. - For leased vehicles, choosing the standard mileage rate in the first year locks you into that method for the entire lease term. - Parking fees and tolls for business travel are deductible under both the standard and actual methods, which is a common exam trap. - A contemporaneous mileage log is mandatory for both methods; without it, the IRS can disallow the deduction. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep