Billings, Montana--(Newsfile Corp. - October 6, 2026) - AE Tax Advisors, a tax advisory firm headquartered in Billings, Montana, today announced a prior-year return review for real estate owners who hold five or more properties and in which one spouse manages the portfolio. The review covers up to three prior tax years and examines how rental activity was classified, depreciated and documented.

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In many of these households, one spouse handles tenants, repairs, bookkeeping and acquisitions while the other earns wage or business income. When returns treat the rental activity as passive, rental losses may be suspended and carried forward rather than applied against the household's other income. Whether different treatment applies depends on the household's facts, the elections made and the records kept.

The AE Tax Advisors review examines:

• Real estate professional status. This covers the 750-hour test and the more-than-half-of-working-time test. On a joint return, one spouse must meet both tests individually, and the spouses' hours cannot be combined.
• Material participation and grouping. This includes whether an election to treat all rental real estate interests as a single activity was available and not made.
• Cost segregation and bonus depreciation. This includes 100% bonus depreciation for qualifying property acquired after January 19, 2025.
• Passive loss carryforwards. These are suspended losses from prior years that were not tracked.
• Short-term rental classification. Short-term rentals can be subject to different rules from long-term rentals.
• Depreciation errors. These include incorrect recovery periods and the allocation of basis between land and building.

The review also identifies existing records that may support the managing spouse's hours, such as calendars, tenant communications, vendor invoices and mileage logs. It sets out what should be tracked going forward. In an IRS examination, records created at the time of the work generally carry more weight than estimates reconstructed later.

Where the review confirms an error or a missed election, the firm prepares amended returns. A claim for refund generally must be filed within three years of the original filing date or within two years from the date the tax was paid, whichever is later. Where a prior return was prepared correctly, no amendment is filed.

Each engagement includes:

• A written tax plan with Internal Revenue Code citations
• A documentation system for tracking time and participation
• An implementation timeline
• Quarterly check-ins as properties are bought or sold and household income changes
• Audit defense

The process begins with a discovery call. It is followed by a non-disclosure agreement and engagement letter, document collection, the three-year review and delivery of the written plan.

About AE Tax Advisors

AE Tax Advisors is a tax advisory firm headquartered in Billings, Montana, providing year-round tax planning, prior-year return review and IRS representation to business owners and real estate investors in 47 states. The firm's team includes licensed CPAs and IRS Enrolled Agents. More information is available at aetaxadvisors.com.

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Source: Nextenco LLC