It depends, real estate activity is normally passive, but you are correct to check it. A few things to consider:
- Guaranteed payments should be reported on your schedule K-1 line 4 Guaranteed Payments (if your schedule k-1 doesn't have this line, check the top left to make sure your schedule K-1 says (1065) below it)
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The IRS has a different version of real estate professional, which is not met by simply being a real estate professional. Only when you meet the IRS qualifications for real estate professional and you materially participate in each rental, will your activity be reported as active self-employment, instead of passive. To be a real estate professional:
- More than one-half of all personal services the taxpayer performs in trades or businesses during the tax year are in real property trades or businesses in which the taxpayer materially participates, and
- The hours spent providing personal services in real property trades or businesses in which the taxpayer materially participates total more than 750 during the tax year.
You may recall answering these type of real estate questions in the software. If you didn't meet these thresholds then that is why it is not flowing as self-employment.
If this doesn't resolve your question, please provide more info based on these details.
