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Updated over 14 years ago,

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1,906
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Mitch Kronowit
  • SFR Investor
  • Orange County, CA
1,396
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1,906
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Mixing Passive and non-Passive income?

Mitch Kronowit
  • SFR Investor
  • Orange County, CA
Posted

I already have an e-mail into my attorney/CPA with this question (so don't bother telling me to check with one), but while he's answering the 80 or so e-mails before mine, I thought I'd post this question here to get some quicker answers and/or ideas for other things to ask.

I currently have a California LLC formed to hold our two rental properties. Hence, all the income is considered passive. If my LLC were to generate some non-passive income, would that make ALL the income non-passive or can I simply separate them from each other?

For example, let's say there is a company that wants my LLC, ergo me, to perform some services for them. This would clearly not be passive income. If I were to perform this work and have my LLC send them the bill, would these earnings "contaminate" my passive income thereby screwing up my tax situation?

I would like to simply keep the two streams of income separate and treated accordingly rather than set up yet another entity, like an S-Corp.

Thanks everyone!

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