SEE-2 - Specialized Returns and Taxpayers - Section 3.4
Apply specialized rules for farmers (Schedule F, income averaging) and rental real estate, including the passive activity loss limitation and the active-participation exception.
Apply the farm income and expense rules on Schedule F, including the cash-method exceptions, weather-related sale deferral, and farm income averaging on Schedule J. For rental real estate, classify activity income and apply the passive activity loss (PAL) limitation, recognising the up-to-$25,000 active-participation exception that phases out as modified AGI rises and the special treatment of real estate professionals.
Schedule FFarm income averagingPassive activity lossActive participationReal estate professional
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