Partnership for rv campground

[JT2307]

I have a LLC Partnership for a Marina and Rv Campground. It was purchased as an investment but the partners are operating it. They have other occupations and are not taking any money out (only putting it in).
I think it should be treated as a rental since slips and sites are rented.

Any ideas?

[Roberts]

Are you saying you'd break out each slip within the marina as a separate rental unit? With depreciation for each separate campsite and slip and a profit / loss on each of them? That sounds like a nightmare scenario.

[JT2307]

That would be a nightmare

I was thinking the RV sites and Slips as a whole - Rental income all in one. Am I missing something?

What I am trying to avoid is any type of self employment tax since this is not their bread and butter. And will eventually liquidate their shares to their children.

Thoughts.

[kathyc2]

I think you need to determine a couple of things b4 determining if subject to SE tax or not:

1) Is the rent coming from real property or personal property?
2) Are substantial services provided with rent?

Another option to consider may be to elect LLC to be treated as S corp with reasonable salaries for members for services provided and balance as return on investment.

[Burke]

I was thinking the RV sites and Slips as a whole - Rental income all in one. Am I missing something?

What I am trying to avoid is any type of self employment tax since this is not their bread and butter. And will eventually liquidate their shares to their children.

Thoughts.

Check out IRS rules on rentals of 7 days or less. If applicable, not considered passive income. Whether or not it is their "bread & butter" has no real relevance.