Taxslayer users

[oceanlovin'ea]

I am imputing the information from a K-1 from s corp.for rental real estate. When you get to the screen to imput the amounts from the K-1, Line 2 pops up with 3 choices - Active income/loss; NonActive income/loss; and material participation income/loss.

I think this is confusing me because the information in the Tax Book talks about passive and non passive income. Rental real estate is passive income.

So what would be active income and what would be nonactive income? Then it has Material participation. Wouldn't that be the active?

Help.

Linda F

[Joe Btfsplk]

Rental invome with material participation

If you have an income of less than $ 100,000 (MFJ) you are allowed to take up to $ 25,000 loss on rental real estate. This is an exception to the usual rules for passive income.

[OREGON BEAR]

S-Corp income

You must remember that there are 3 exceptions to deduct a business loss. 1, Are you an active participant - meaning do you take active participation in the operateration of the S-Corp. 2. Are you a non-active participant which means you have no actual involvment in operating the business. 3. Material participation, Remember the 500 hr rule or puting in more time than any other owner. You can be an Active participant but be limited by your Material Participation in the Business. These scenieros become important if there is a loss involved and it must be suspended. If you have a profit it's not quite as critical what you chose unless you have prior suspended losses. But if you had those you would know the answer to the question, simply because you have suspended losses.

[oceanlovin'ea]

Ok Thanks

That makes sense, Oregon Bear.

I guess my brain was a little fried last night and I couldn't figure anything out.

I gave up and went to bed. Hopefully today is a better day.

Linda F