Pass through expenses for STR - active or passive designation?

[John Bernardo]

I'm working with a CPA who is arguing that STR should be considered a passive designation and therefore losses in our holding LLC cannot be applied to my W2 wages (which are > $150k). My spouse and I will be allocating more than 100 hours managing and working in this business. Sure we hire handymen and cleaners, but we are still active in the daily operations and listing set up process.

In addition, we plan to BRRRR properties into LTR holdings (separate LLCs), where the rehab process (even just the leadgen portion) over the year would definitely put us into the 100+ hour territory.

For both the STR and BRRRR LTR, can't we designate those both as active income given our involvement?

[Ashish Acharya]

Quote from @John Bernardo:

I'm working with a CPA who is arguing that STR should be considered a passive designation and therefore losses in our holding LLC cannot be applied to my W2 wages (which are > $150k). My spouse and I will be allocating more than 100 hours managing and working in this business. Sure we hire handymen and cleaners, but we are still active in the daily operations and listing set up process.

In addition, we plan to BRRRR properties into LTR holdings (separate LLCs), where the rehab process (even just the leadgen portion) over the year would definitely put us into the 100+ hour territory.

For both the STR and BRRRR LTR, can't we designate those both as active income given our involvement?

For LTR, you have to qualify as REPS and materially participate in your properties. 

For STR, there is no requirement for REPS but you have to materially participate in your properties.