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Randall

Rental Non PAL

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Client rents out a cabin, average 7 days or less.  Pays the state lodging tax.  It appears this is a rental but not for purposes of passive activity loss.  It is in an two member LLC.  Losses to be reported.  My questions:

Does this go on 1065 page one or Form 8825?

For Sch K-1 input to 1040, do I check at top number 3 (Vacation, short term rental)?

If I check rental activity but not passive activity, ATX doesn't show the loss.  If I don't check the rental activity, ATX shows the loss.

If the two members are husband/wife, can both qualify for material participation if one or both are doing the related work?  Do both have to qualify individually?

 

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7 days a year on average??? that seems to be a hobby or an investment property.

They can pocket the rent and not report it anywhere.

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7 hours ago, cbslee said:

 He didn't say per year. I assume he was referring to the length of the average rental. It sounds like a short term rental.

 

Yes, average stay 7 days or less.  Total receipts for year over 60k.  Spread over all 12 months.  Big loss with depreciation, mortgage interest.

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First question, has a partnership been established? I am assuming you are in KY which is not a community property state. Therefore, the IRS says a husband and wife owned LLC must file as a partnership on form 1065 which the rental activity is reported on form 8825.

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Yes, KY, 1065.  I agree 8825.  From my reading, it is a 'rental', therefore Form 8825.  But for purposes of the PAL limitation, it is one of the exceptions and they can claim the loss without being a real estate professional.  Short term rentals averaging 7 days or less.

 

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