Jeff-Ohio wrote:Indeed. So how do you do it with 50/50 two-man partnership where only partner is “active” (and the partnership might only own 1 residential rental and only $12k of annual rents are collected) – (1) partnership would be on accrual, correct and (2) partnership would be subject to Sec 163(j), right?
From what I have read, yes.
BUT, my head is a foggy mess. My situation is three partners, two of which are limited but 100% of everything flowing through the partnership, including losses, are allocated to the "managing" partner. They do not meet requirements for safe harbor under 199A. But, I fail to see how they could also qualify as a tax shelter (namely, syndicate, since 100% of profit and losses go to one partner). Seems they are then an excepted trade or business for 163(j), no? Similar scenario you raised--$12k rental income, but total losses amount to $6300, inclusive of depreciation and about $3400 in interest, and excludes over $5k in capitalized repairs that satisfy definition of improvement/betterment.