Real Estate Professional Status (REPS)

REPS's promise of unlimited passive loss deductions collapses under its crushing requirements: 750+ hours annually in real estate and more time spent there than at your day job. The IRS wins over 60% of Tax Court challenges against REPS claims, making it riskier than #8's Puerto Rico Act 60 for those without ironclad documentation. Only taxpayers averaging 1,000 hours per year in qualified real estate roles can confidently pass muster, leaving 9 out of 10 applicants exposed to full tax recapture.