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Business & farm
You would have to list the income in box 1 on your K-1 schedule as ordinary income in order for it to be considered as being non-passive. One way you could do that is if the average rental period during the year was less than seven days. If you were running a bed and breakfast type of activity and you provided daily services like cleaning and food preparation, that may also be a way to have the activity considered non-passive. Also, your material participation must consist of more that 500 hours in a year, or more then 100 hours and no-one else participates more than that. So, it may be difficult for you to treat the acticity as non-passive.
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March 30, 2023
1:06 PM