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An LLC is a business structure granted by state statute. For federal tax purposes, it is disregarded. All it does it protect (sometimes) an owner's personal assets from being seized in a lawsuit against the company. That's why it's called a Limited Liability Company. It does not make a passive activity active. Real estate professionals who meet the material participation tests file Sch C, not Sch E, and can claim home office. Your client's single rental property likely is a passive activity (unless it's a huge complex that he works on full time). In a nutshell, forming an LLC and putting property into it is a state classification and has nothing to do with federal taxation. To the IRS, it's still whatever type of business it is and all the usual rules apply.

Think of your stress level. Is this client worth it? You may be happier and better able to get another client that works with you instead of against you. IMO, life is too short to deal with folks like these. Breathe.....

Stories like this should be lauded, as it gives up hope for the future (as compared to the "regular" news). I say this as being in a similar situation, son who helped many with initial covid issues, participating in developing an in house test for covid when there were not enough tests to go around, etc. (Sr. Clinical Researcher), and who was encouraged by his mentors to take the MCAT and is now an MS1 - and already helping patients in student run free clinics.

In order to take the OIH deduction, the rental activity would need to rise to the level of a trade or business. The only OIH change made by TCJA was elimination of 2106 that I am aware of.

Thanks, makes me feel better.

This is my third year of using Medlin and I can honestly say that everything works smoothly and efficiently the way that it should. An extremely good value for the low price that he charges. My only complaint is that I would like to see a few more features/functions added for which I would have no problem paying more. However I totally understand why he doesn't add these things.