The Tax Court (Hofinga, TC Summ. Op. 2013-43) recently reiterated that real estate pros have to satisfy two time tests to deduct their rental losses in full:

• They must spend over half of their working hours; and
• They must spend at least 750 hours per year materially involved in real estate as a developer, broker, landlord or the like.

Although a contemporaneous logbook that documents the number of hours worked is not required, real estate professionals still must have calendar entries or similar evidence to validate their time, or their losses will be passive. Real estate professionals can be exempt from the passive loss rules; but they need proof that they’ve met the time tests.

With the explosion of online activity in recent years and the creation of virtual currencies, lawmakers are becoming increasingly concerned about how those actions, sometimes taking place in economies that exist entirely within a specific program, might impair the abilities of the IRS to collect what’s due.

Mixed and open systems users are able to turn a virtual currency or good into something with real-world value, or even U.S. dollars (which could create a taxable item.). “Closed-flow” currencies probably do not come with a tax issue because the virtual currency exists entirely within a virtual setting and cannot be used to obtain real goods and services or turned into U.S. dollars.

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