Discussion:Self Rental Allocation
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Discussion Forum Index --> Tax Questions --> Self Rental Allocation
Mtmckeecpa (talk|edits) said: | 15 November 2007 |
| Taxpayer owns 100% of commercial bldg, Sch E, and owns 100% of S Corp stock. Material participant in S corp, W-2.
Commercial bldg has two tenants, the S corp and another unrelated tenant. The Sch E is very clean, no debt, minimal expenses. Shows profit. The rental income is 55% S corp and 45% other tenant. Rent is FMV. Taxpayer also has other residential rental property with passive losses. Question: Do the self rental rules under 469 preclude the taxpayer from allocating the rental income from his S corp and the unrelated tenant so he may use the allocable net from the unrelated tenant to offset his other passive rental income? Or,is the entire net recharactierized as nonpassive? | |
Death&Taxes (talk|edits) said: | 15 November 2007 |
| Reg. 1.469-4(d)(1) would seem to point to that 45% as being substantial. Situation seems much different from the recent case Candelaria v. U.S., (DC TX 10/05/2007) 100 AFTR 2d 2007-5378 which was discussed in a recent Checkpoint Newstand bulletin. | |
Mtmckeecpa (talk|edits) said: | 19 November 2007 |
| 45% is substantial and would not fall under 469-4(d)(1).
I've looked at 1.469-2(f)(6) but it does not address my question about allocating the rents from a single building. It would seem REASONABLE to allocate between passive income for the non-related tenant and non-passive for the 100% owned S corp. | |
