I am going to have farm equipment assets located out of state that will be generating rental income payable from a payer in another state. The equipment will be purchased new. It is a passive investment and I will receive a 1099-MISC for rents paid. The payer has suggested that I may want to look into forming an LLC for the investments in order to take advantage of write-offs and deductions, particularly Section 179 and equipment depreciation. I've read that Section 179 deductions can only be taken off "active" income from an LLC. Since this is a passive investment, would this be worthwhile to form an LLC? What additional deductions/savings/protections will I benefit from having an LLC versus just being an individual investor? Without the LLC, can I still write off depreciation of the equipment? Thanks for your help.
