Hi everyone, thank you so much for the thoughtful reply.
To save your time reading - tl;dr - In 2021, I switched from a long-term rental into STR and provides all services to guests (cleaning, check-in/check-out/welcoming guests, improvement, repairs, supplies). I can pass the material participation test for STR. Hence, I'm pondering between Schedule C and Schedule E. I have filed this long-term rental under schedule E in 2020. Switching to schedule C this year will allow us to deduct on active income since we spent a lot to ramp up the STR business. However, I want to learn more details before making the decision.
If I switched to Schedule C now (as Section 469 exception), NOL and depreciation are my next topics
- Depreciation: I learned from another thread to close Schedule E and start new on Schedule C. I need to deduct any depreciation I've taken and have a new cost basis in Schedule C. Then, we start depreciation from year 1 on Schedule C. At this point, I should delete Schedule E and its carried-over depreciation from last year. Is it correct?
- NOL: how should I 'transfer' net operating loss from the previous Schedule E over to Schedule C? Or can I move such NOL to other Schedule E properties?
What is your experience in terms of audit triggering? I heard that audit is time-consuming...
Thank you again
