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[Anonymous_]

The regulation that is applicable here simply takes the rental out of the passive activity loss rules; it does NOT put the rental into the active business/self-employed classification (i.e., Schedule C reporting).

Again, real estate dealers and those who provide significant services to renters are the only taxpayers who report on Schedule C (or otherwise report as would a typical business enterprise).

[Anonymous_]

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@QandA1 wrote:

So can I amend to report it on the 1040 instead?

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It appears from the Rev. Proc. that doing so would be allowed, yes. 

[Anonymous_]

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@QandA1 wrote:

Can you give a link or irs pub I can look up to those rules?

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I'm just going to post a link the Schedule E instructions for now.

https://www.irs.gov/instructions/i1040se#en_US_2023_publink24332td0e1083

Generally, rental real estate activity is reported on Schedule E even if it is also a trade or business activity; however, if you provided significant services to the renter, such as maid service, report the rental activity on Schedule C, not on Schedule E. Significant services do not include the furnishing of heat and light, cleaning of public areas, trash collection, or similar services.

If you were a real estate dealer, include only the rent received from real estate (including personal property leased with this real estate) you held for the primary purpose of renting to produce income. Do not use Schedule E to report income and expenses from rentals of real estate you held for sale to customers in the ordinary course of your business as a real estate dealer. Instead, use Schedule C for those rentals.

[AmeliesUncle]

I'm just commenting to say that TagTeam is correct - the short-term rental with Material Participation goes on Schedule E, not Schedule C (unless you provide "services", such as maid service or meals).

You will need to use the CD/downloaded version to go into the "Forms" to indicate it is non-passive.

As for your question to amend to change applying Revenue Procedure 2022-69, I'm not sure.  At first glance, I don't see any restrictions about doing that, but I haven't dug into things too deeply so I could be wrong.  At this point, why do you want to amend, rather than just leaving it as it is?

[AmeliesUncle]

If the LLC does not own the property, is it even involved in the rental?

At first glance, it is just the husband and wife renting the property out.  Nothing to do with the LLC.

[Anonymous_]

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@AmeliesUncle wrote:

At first glance, it is just the husband and wife renting the property out.  Nothing to do with the LLC.

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Exactly! ......and if the husband and wife are filing a joint return, is there any issue whatsoever?

[AmeliesUncle]

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@QandA1 wrote:

@do you think a short term rental with material participation. With out meeting the real estate professional status.  Is able to take all losses without being limited? 

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Yes.  It is non-passive and therefore can offset other income without limitations.

[AmeliesUncle]

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@QandA1 wrote:

Hmmm I wonder if my software will let me do that. Without checking the Realestate professional box. 

and it will be reconciled on 8582, right? 

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The TurboTax interview neglects to ask about that and you can't do it in the online version.  You need to manually check the box in the Forms mode of the CD/downloaded version (see my prior comment about it).

Forms (upper right hand corner), "Schedule E Wks" (on the left) then check Box "G".

No, there will not be a 8582 for a non-passive activity.

[Anonymous_]

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@AmeliesUncle wrote:

Forms (upper right hand corner), "Schedule E Wks" (on the left) then check Box "G".

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Yep - just posted the screenshot for this procedure a couple of days ago.