Why does it put our income under "Limited Partner Active" on analysis of Net Income instead of "General Partner Active"?

Me and my husband are the only 2 member-managers of our LLC for a rental property. Our K-1 is correct, it has General partner or LLC member-manager check marked. I am confused because on the Analysis of Net Income, it put our income under "Limited Partner Active"?

Shouldn't it be under General Partner Active?

I am also confused on if we are active or passive? We do not work more than 100 hours a year on the rental therefore, do not pass the "Active test", but we are the only 2 managing members of the LLC and have no one else involved in the business. We take care of everything.

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1 Best answer

Level 13

Jan 30, 2022 1:03:14 PM

All appears to be correct.

An LLC member-manager is NOT the same as a general partner in a partnership, so the analysis of net income is correct.

Can be confusing, but that is how the IRS box is designated on the K-1. This gets to the determination of whether the income / loss is subject to SE Tax for a trade or business.

You are both active based on your facts. You meet one of the tests:

The individual’s participation in the activity constitutes substantially all of the participation in the activity of all individuals for the tax year, including the participation of individuals who did not own any interest in the activity