Related Party k-1 input
Is there a place on the K-1 input screen to indicate that the rental loss from an S corp is from a related party?
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ag999OtoOr4izzacwZ5xHE
03/12/11 12:55pm PST
Viewed by asker 03/23/11 9:33am PDT
Viewed by asker 03/23/11 9:33am PDT
4 Replies
Amy-in-PA
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03/12/11 1:08pm PST
What do you mean, Marianne, about a related party, on a S-Corp K-1? You mean that the S-Corp owner owns a large part of the S-Corp? Most of them do. You can't even have an S-Corp if you have over 100 owners, as I recall. So, I guess I don't even understand the question.
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03/12/11 1:24pm PST
OK. Here is the deal. I have a S/H who is the only S/H in an S corp and the only S/H in a C corp. The S corp was set up to be the owner of all the real estate and equipment. The C corp leases the equipment and building from the S corp (monthly payments are made).
The rental income and expenses are put on an 8825 in the S return and the equipment lease income on the 1120 S itself. There is an ordinary loss on the K-1 from the equipment leasing activities and another loss on the K-1 from the rental real estate.
I am working on the S/H individual return. Maybe I am not clear about the passive activity losses, etc. Do you have a suggestion for me as to the passive nature of these losses? I am sure the real estate rental should be passive, but I have been under the impression that the leasing of the equipment is more like an active business run by the shareholder.
I will appreciate your input. Thanks!
03/12/11 1:33pm PST
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The solution
The real estate will be passive by definition, since a loss. So no issue there. I agree that the equipment rental isn't by definition passive.
No sale so related party loss rules aren't relevant.
PhoebeRoberts
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03/12/11 1:19pm PST
Is the issue that it's a related party, or that the self-rental rules apply? I don't believe there's a related party issue, barring a self-rental issue.
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