K1 information

[floydct]

I have box 1 and box 2 info on my K1.  I entered that info on TT as two K1s; understand that.  Box 1 is my corporate overhead expenses, so it will always be a loss, while box 2 is the revenue/expenses profit from our rental apartment complexes.  With box 1 always being negative as ordinary business income, will it still be deducted from my box 2 income in figuring my taxes?  There isn't some IRS rule that limits losses from box 1 against box 2 income like the loss limits for annual securities losses against other income is there?.

[Mike9241]

If the overhead is directly related to the rental and that's the only activity of the corporation, I believe it may be appropriate to reflect those expenses as part of the rental activity. More info would be needed about the OH what it is, and why it is incurred. 

Also, in my opinion, an S-Corp (or C-Corp) is the worst way to hold rental real estate. The issue is tax basis.  With any other type of entity, your share of the mortgage debt would be part of your tax basis. Not so with an S-corp. Your basis is your equity contributions and direct loans by you to the corp though they too can generate problems + income - losses - certain tax credits - distributions.   Mortgage debt does not count, even if personally guaranteed

[floydct]

Thanks, The overhead is almost entirely salaries and expenses of the corporate officers who oversea the two LLCs that each own an apartment complex as well as minor corporate legal expenses and accounting fees.