Self Rental Losses

Hi Tax Pros, I hope you are well. We have a customer who has a self-rental commercial property which he rents to his business. 2021 was the first year he did this since he bought the property in 2021. We had him do a cost segregation study, and he can accelerate around 1MM in assets of this building. When we prepared his personal 1040, he had around 1MM in K1 S corp income from his business and the 1MM of section 179 losses from the rental are wiping out the S corp income. I was thinking this would be similar to a passive rental, and the losses would be suspended because of income limitations.

I am assuming he is getting all these net losses from the rental used against the S corp income because this is a nonpassive rental property. Does this make sense? Thank you for any guidance.

We have a customer who has a self-rental commercial property

We had him do a cost segregation study and he can accelerate around 1MM in assets of this building.

Why? If it's a self-rental, the losses are passive.

Thank you. The depreciation is over 39 years of this property. They can rent it for more than the depreciation. So it is beneficial regardless because their rent revenue can be lowered by future suspended losses.

Need to group the rental with the S corp. Treas. Reg. 1.469-4(c)(1) provides that once grouped, the activities are treated as a single activity. This allows the rental loss to offset the net profit from the S corporation. Without grouping, the rental activity is a passive activity. See REV PROC 2010-13.

Why 179, was not bonus available?