For the last 2 years,this client was not able to claim his rental losses because his annual income is over 150,000 and he is not a real estate pro.At the start of 2006,he decided to manage his 3 rental properties full-time and filed with the state of CA as a Property Management,LLC.Since his business is a sole proprietorship,he has to file schedule C.The question is what would be his gross income in schedule C assuming that he is not getting paid as property manager?What about his rental properties,does he need schedule E?
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Sch E
Sch E for the rentals. Although it will still probably be passive loss because he will need material participation with each property unless he decides to group them into one activity which might not be a good idea if there will continue to be suspended losses. The other part to get non-passive losses it he must spend more than 750 hours in the personal services. -
I didn't follow
>>he decided to manage his 3 rental properties full-time<<
I didn't follow what he decided. Is he quitting his 150K job to run his losing properties? What will his management company do "full time" that he wasn't doing before?
The answer to your question will depend on the nature of the work, not the structure of the company.Comment
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By default a single-member LLC is a disregarded entity. That does not mean it has to file a 1040 Sch-C. If he did not have a LLC he would file 1040 Sch-E. The single member files whatever form is needed to report the LLC activity. In your case he would file only a 1040 Sch-E.Comment
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