Can I convert Rental Income from Schedule E to Active Income on Schedule C?

[Gary Li]

I have several Rental Properties owned by my wife and I, we manage by ourselves, so we have positive Rental Income on Schedule E. but negative Income on Schedule C, can I put $3000 Property Management Fees as expense on Schedule E, and add this $3000 as Earned Income on Schedule C?

The reason we want to do this is, we want to contribute the money to solo 401K, only the earned Income can contribute, the passive income can not contribute to solo 401K, right? so we want to reduce the rental income on Schedule E and increase the earned Income on Schedule C. any suggestion, I will really appreciate!

[Rob Beland]

I think what you are asking @Gary Li is if you can bill yourself $3,000 to manage your own real estate, correct? I'd think the answer is no on that one. You can't create a taxable event with yourself. Is that what you are looking to do? Essentially it's all your money even though it's in an LLC. Maybe @Brandon Hall can clarify.