2026-07-04

# 2026-07-04

## Rule Studio — PAL/basis rulings R1–R5 (RULED 2026-07-04)

Ruled on five PAL/basis deepening units today. All spec-first, following the
standard pipeline: RS amendment → Ken walk → seed/export → tts build → four legs.

- **R1:** 8582 spec amendment — self-rental recharacterization
  (Reg. §1.469-2(f)(6)): per-activity self-rental flag; net income → nonpassive,
  net loss → stays passive; recharacterized income excluded from the passive
  basket in the 8582 netting.
- **R2:** 8582 spec amendment — PTP segregation: per-PTP loss buckets; PTP
  losses offset ONLY same-PTP income, never the general basket; suspended PTP
  losses carry per-PTP; full release on complete disposition of the PTP interest.
- **R3:** REP status — preparer determination checkbox (§469(c)(7)) flipping
  rental treatment to material-participation testing, plus advisory diagnostic
  when rental losses are limited and W-2/SE profile suggests possible
  qualification.
- **R4:** At-risk RED diagnostic — fires when a loss activity carries
  nonrecourse financing (or at-risk < basis indicators); names Form 6198;
  blocks nothing else.
- **R5:** §461(l) RED diagnostic — fires when aggregate net business losses
  exceed the threshold. ⚠ TY2025/TY2026 thresholds must be pinned from the IRS
  source during authoring — inflation-adjusted and OBBBA-touched; training-data
  numbers are not to be trusted.

Destination: rulings recorded in PRODUCT_MAP.md; units added to
SEASON_CHECKLIST.md → Rule Studio Authoring Track (July, after the 1065 core
sequence). CC prompt drafted and ready to run.

## Decision — one work queue per repo (queue-conflict guard)

Ken flagged a worry that adding these units risked conflicting the planning
docs, and the worry was right. Decision made:

- **SEASON_CHECKLIST.md (Rule Studio repo) is the sole authoring queue.**
- **SPRINT_SCOPE.md (tts-tax-app repo) remains the sole build queue** — its
  authority established June 2026 stands.
- **Handoff rule:** when a unit's spec is sealed and its export verified, the
  corresponding build topic gets appended to SPRINT_SCOPE.md in a separate
  tts-tax-app session. Never mirror a unit into both queues. The
  "tts build → four legs" stages named in checklist units describe the
  pipeline; they are NOT scheduled from the checklist.
- The CC prompt carries a locate-first guard: find PRODUCT_MAP.md and
  SEASON_CHECKLIST.md before editing; stop if missing or duplicated — never
  create fresh copies.

Boundary diagnostics from PRODUCT_MAP.md (M-3, DFE-fail, §704(c), §754,
apportionment) stay separate small units, scheduled opportunistically alongside
1065 core authoring, same handoff rule.

## notes

- This entry was written directly to the Google Drive mirror by Claude (chat,
  Ken2 account) — it does NOT exist in the local vault yet. The sync is one-way
  (local → Drive), so next CC session on the main machine: copy this entry into
  the local diary folder so it survives as canonical and isn't orphaned or
  pruned by the nightly sync.