Tax deductions on partnership return for out-of-state investors

[Marvin Song]

Hi Everyone!

My wife and I live in NJ but own rentals in Indiana managed under IN LLC and its parent WY LLC. We are members of WY LLC with 50-50 ownership. My CPA says 'since both rentals are in another state, it is difficult to claim that you are both actively participating in the rental activities meeting the hours test.' and suggests to claim only half of tax deductions.

Is this how other out-of-state investors do their returns?

I don't want to be too aggressive but I'd like to understand what's reasonable and what's aggressive by understanding how other people does their returns.

Look forward to hear your experiences!!

[Steven Hamilton II]

Originally posted by @Marvin Song:

Hi Everyone!

My wife and I live in NJ but own rentals in Indiana managed under IN LLC and its parent WY LLC. We are members of WY LLC with 50-50 ownership. My CPA says 'since both rentals are in another state, it is difficult to claim that you are both actively participating in the rental activities meeting the hours test.' and suggests to claim only half of tax deductions.

Is this how other out-of-state investors do their returns?

I don't want to be too aggressive but I'd like to understand what's reasonable and what's aggressive by understanding how other people does their returns.

Look forward to hear your experiences!!

 Claim your legitimate expenses. And be able to prove what you are incurring. Actively participating is a whole separate issue.  What are the expenses he is struggling with?