Self-Rental Income and Net Investment Income Tax

Technical topics regarding tax preparation.
#1
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1
Joined:
12-Jun-2018 7:30am
Location:
Charlotte, NC
We have a client who is a 10% S-Corp shareholder who participates materially, and owns a 50% stake in the real estate rented to the S-corp.

In regards to the Net Investment Income Tax, I know that the rental income from the self-rental is excluded specifically under Sec 1411 for landlords that participate materially in the business that is renting the property (in this case the S-corp), but is the only test material participation? Does it matter if the landlord is a 10%, 2%, or 1% shareholder of the S-corp?

Thank you in advance for your help!
 

#2
Posts:
1121
Joined:
12-May-2021 11:01am
Location:
Alabama
Ownership is not part of this test. It's just material participation (500 hours or whatever). I believe 0% ownership would qualify just fine so long as they're meeting one of the material participation standards.
 


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