[REG] Passive activity(sec.469), Sch E

 

Activity

Taxable Activity	Non-passive Sch C/F	Income(Rev>Exp) taxable income	Loss(Rev<Exp) deductible loss
	Passive Sch E	Taxable Income	X non-deductible loss
Non-taxable Activity	non-taxable income nondeductible exp

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Passive activity (Sch E)

1. Definition

  1) Not materially participated(managed) in S corp & Partnership's biz operation(work 500h/Y ↑)

  2) Any rental activity

 

2. Loss from passive activity > offset passive income O

                                              > offset other income X

    Excess passive loss > carried over indefinitely / deduct full in the year of disposal

    Credits from passive activities > offset tax liability, carried forward indefinitely

 

3. Rental activity

-Rental income over 15 days 

Cash basis	Accrual basis
revenue is actually or constructively received in cash or FMV of property	recognition occurs according to the rules of GAAP, revenue is the table when earned

Loss rental income Prepaid rental income Rent cancellation payment Improvement-in-lieu of rent <Rental expense>                Net rental income Or Net rental loss

* Accrual basis라도 prepaid rental income은 받은해에 인식한다

 

1) Rental income

     - regular income

     - rent received in advance

     - nonrefundable deposit received

     - Penalty received in cancellation of lease

   

   2) Active rental activity Loss

     * Exception for materially / actively participated rental activity 

       :  up to $25K of loss can be deductible, but not individuals with income over AGI 100K

         25K-(AGI-100K)*50%

         if the below are met

         - personally operates the rental property

         - hires an agent to operate the property

         - participates in management decisions

         - must own at least 10% of the rental activity

 

     3) Rental of vacation home

         - A vacation home, not a principal residence

         - Rental income + expenses > reported on Sch E

          Deductible expenses

                # of days rented / Total personal + rental days used * Total expenses

           *  excess expenses over income > not deductible 

           *  personal portion of interest and property tax, deducted on Sch A

           *  vacation home is rented for less than 15 days > income, expenses not report