Example C/S corporation
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Alice owns 100% of Medical Data, a C corporation, and 100% of Your Realtors, and S corporation. She worked full time for Medical Data (i.e., she materially participated in the entity), but Alice did not materially participate in Your Realtors. During the tax years 2014 through 2016, Your Realtors leased real estate to Medical Data.
Alice reported these rental amounts as passive activity income on her Schedule E, and she offset that income against passive activity losses from other entities. The IRS reclassified this rental income as nonpassive income under Reg. section 1.469-2(f)(6). Who is right? Does section 469 apply to S corporations? Elaborate.
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Solution Summary
The Solution outlines whether specific rental amounts are passive activity income or nonpassive income.
Solution Preview
http://smallbusiness.chron.com/s-corporation-passive-income-restrictions-76870.html
http://www.journalofaccountancy.com/issues/2001/may/selfrentandpassivelosses.html
Alice owns 100% of Medical Data, a C corporation, and 100% of Your Realtors, and S corporation. She worked full time for Medical Data (i.e., she materially participated in the entity), but Alice did not materially participate in Your Realtors. During the tax years 2014 through 2016, Your Realtors leased real estate to Medical Data.
Alice reported these rental amounts as passive activity income on her Schedule E, and she offset that income against ...
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