Airplane hangar rental and multiple business llc

[snowshoe]

Every year! Every year new things come up. Interesting, but arg!!! Any Airplane Hangar folks out there?

Working on the 1065- thought I was done, now I am thinking not! Folks have a little tourist shop and also an Airplane Hangar Rental. My understanding is that these each need it's own K1- is this accurate? And does the airplane hangar rental (on rented property at municipal airport) need to be listed as 'rental income' or is it business income? My research has pointed to both options. And am I missing anything else obvious?

[TaxGuyBill]

Are they just renting out the hanger space, or are they providing "services" to those who rent from them?

Everything technically is entered on one K-1. However, if "ordinary" income (box 2) and "rental" income (Box 2), you may need to do more. If there are other income, deductions or credits on the K-1, you'll need to include an attachment explaining if those items apply to the "ordinary" business income in Box 1, of if they apply to the 'rental' income in Box 2.

[snowshoe]

Thank you. Seems so strange to me, having to do more than one K1. I assume that is done on the taxpayers side of this situation (not from within the 1065). The Hangar rental is JUST rental, perhaps snowplowing is done or something- but not servicing of the planes. There may be more done in the future though. Obviously, I need to read up on the issues associated with this & all help pointing me in the right direction is appreciated.

[TaxGuyBill]

If they are just renting space, it is a rental property on Form 8825.

Yes, many software requires a person to enter a K-1 as two separate K-1s when there is information in both boxes 1 and 2, largely to know how to treat the other boxes on the K-1. That is because the software needs to know what is potentially passive income (the rental) and what is potentially a non-passive income (box 1).