1120-US: Renting to a nonpassive activity (FAQ)

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Question

How do I indicate in UltraTax CS/1120 I am renting to a nonpassive activity?

Answer

If there is a rental of property to a nonpassive activity, certain income may be recharacterized and excluded from passive activity income. Publication 925, Passive Activity and At-Risk Rules contain instructions on how to report income/loss from such activities.

  • If there is net loss, income and losses are treated the same as any other passive income or loss.
  • If there is net income, no income or loss is reported on Form 8810. Instead, the income or loss is reported on the forms and schedules normally used.

To indicate the activity is to be recharacterized, enter X in the Subject to recharacterization rules checkbox in Screen Rent-2. UltraTax CS uses the recharacterization rules for the activity.

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