I'm researching the situation in which the same individual owns a warehouse in an LLC and a manufacturing business in an S Corp he runs and leases the warehouse to the business.
I read about self-rent and how that can be a tax pit-fall as rental income is considered non-passive but losses passive. I also read one can circumvent this limitation by grouping the 2 businesses if they are an 'appropriate economic unit'.
Everything I read focuses on avoiding the rental income from being non-passive, to allow the individual to apply losses from other passive investments to be applied to the rental income.
My question is, if the rental property and the business are grouped, and the rental property realizes a loss, can that loss be applied again the income of the business since they are grouped as an economic unit?
Thanks!
