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re: S-Corp Question
Posted on 3/20/13 at 4:54 pm to ShreveportTIGER318
Posted on 3/20/13 at 4:54 pm to ShreveportTIGER318
quote:Rental real estate is by definition a passive activity unless there is material participation. There are separate line items on the Schedule K-1 for rental real estate and other rental activities. The reason is because rental real estate requires separate reporting via Form 8582, used to determine passive activity losses allowed.
The character of the income to the S-Corp is "passed through" to the shareholders. Since this rental income is ordinary income, it will be ordinary income to the shareholders.
As I said, businesses that have rental real estate activites incidental to another trade or business have complex reporting issues, and consulting with a tax professional is recommended.
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