On my Schedule E, Part 1, I have income on line 24 from royalties (mineral rights I own on several properties). On line 32 of Part 2, of Sch. E, I am showing $0 because Form 8582 says I have no passive losses allowed. I actually had large losses under the LLC I own with two partners that has a rental property. However, Form 8582 eliminates these large losses because my income is greater than $150k.
Shouldn't I be able to offset my royalty income with my real estate loss even though the former is personally owned and the latter is from an LLC? If I personally owned the rental property, it seems clear that the two would offset in Part 1 of Schedule E. If I can offset these two between person and LLC, how do I do it?
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Per the IRS, net income or loss from royalty and lease payments of natural resources is not considered passive income. rental losses are. so one can not offset the other
Thanks! That is very helpful. Since the royalties were showing up on Schedule E, I assumed they were considered passive income.
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