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Old 01-30-2015, 02:56 PM
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Self Rental

Taxpayer is an active member of an S Corp. Taxpayer also owns commercial building through a partnership. The S Corp rents one unit in the commercial building from the partnership. How would I report the self rental of the one unit on the partnership 8825 in order to flow to the 1040 as non-passive? Trying to reduce NIIT.



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Old 01-31-2015, 01:30 PM
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Originally Posted by carolf View Post
Taxpayer is an active member of an S Corp. Taxpayer also owns commercial building through a partnership. The S Corp rents one unit in the commercial building from the partnership. How would I report the self rental of the one unit on the partnership 8825 in order to flow to the 1040 as non-passive? Trying to reduce NIIT.
You, I mean the LLC, can charge the S Corp rent and the S Corp can deduct it.aslongas you are treated as r/e pro, it, rental income, is active income;Getting the real estate pro status just relieves you of the “per se” passive rule. You must report the rent as income on Sche E of your LLC. Since it is an S Corp, taking a home office deduction could be challenged by the IRS.Although the S Corp will still deduct the amount of rent paid on their coporate tax return on 1120S, only home mortgage interest and the real estate taxes paid may be expensed against the rental income you would report on your Federal 1040 Sch E.
This means that you would not be able to deduct any % of utilities, repairs, depreciation, etc on the Sch E.You may however, set up an accountable plan and have the S corp reimburse you for the portion of expenses that would have arisen from an office in the home situation.



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