21 Nov Common Mistakes with Passive Activities – IRC 469 – IRS Form 8582
Posted at 00:00h in Passive Activity
- Not grouping related activities as one activity
- Treating equipment leasing as non-passive by placing the revenue from such on Schedule ‘C’ or Schedule K-1 line 3. Rentals are passive even if the taxpayer materially participated
- Deduct rental real estate losses when AGI is more than $150,000. The $25,000 Passive Activity Loss Limitation offset is phased out when modified adjusted gross income exceeds $150,000
- Real estate professional has 10+ rentals listed all as non-passive.
- Schedule ‘E’ net income is reported on Form 8582 as property leased to taxpayer’s corporation or partnership. Self rented property income is not passive
- Reg 1.469-4(d) prohibits grouping a rental activity and a business unless each activity is owned in identical percentage and property is leased to the business. A rental can never be grouped with a ‘C’ corp.