All Forum Posts by: Eddie L.

It appraised for 215 including the fact of the slope?...

@Bruce D. Kowal

What if just two friends who own a property in the form of tenancy in common 50/50? Would they just fill out schedule e as if it was two separate rental properties with same address?

***Not a CPA and no filing tax return experience for others***

I don't even think that worksheet needs to actually be submitted, but... "Rented Property" is the property that you're paying rent on. I assume this doesn't apply to you? Purpose of this is to understand how much of your business is in Philadelphia. For example if you rent an office in Philadelphia for your operations for $100 and you have a $1,000,000 office in NY then your philadelphia apportionment would be lower. In your case I think your rental property would just go to Land and Buildings Owned with equal amount under Philadelphia and Everywhere.

@Bruce D. Kowal

Do they need to file a partnership tax return though? It sounds like no business entity was set up and no partnership agreement is in place. For a tenancy in common, would they just report it on schedule e as if it is two separate rental properties each owned by the individual?

I would think you each report your own share of the rental income and expenses. 1099 is not needed since you each own 50% of the property and technically could've each just received 50% of the rental cash instead of having one person collect then transferring over. How you collected should have no tax implications just the fact that you're both entitled to 50% of the rental income and did receive it so. 

Can she loan it to you and then you pay back the loan with 50% interest in the partnership after all is done and settled?

2. Should probably file a corrected 1099 showing zero income issued to your "partner".

3. In either case, I think you'll be reporting on schedule e.

 so... has this 1099 been filed with the IRS?

***Not a CPA and no filing tax return experience for others***

Ok... I don't think the limitation is due to the fact that this is a "business" credit. The limitation your CPA is referring to is most likely the Passive Activity Credit Limitation, which would limit the utilization of the credit to your passive activity taxable income tax effected. Although if your MAGI is less than $200,000 there is potentially a special allowance that can be taken. None of these passive activity limitations matter though if you're a real estate professional. 

References
1. IRS Form and Instructions for Figuring Out How Much of Your Passive Activity Credits are Limited 
https://www.irs.gov/pub/irs-pd...

https://www.irs.gov/pub/irs-ac...

2. IRS Audit Guidance - Information on Passive Activity Credit Limitation and Example (Pages 146-148 of PDF)

https://www.irs.gov/pub/irs-ms...

3. Additional IRS Overview of Rehabilitation and Low Income Housing Credit

https://www.irs.gov/pub/irs-ut...

Wouldn't hurt to diversify. With that being said, do you have a high deductible health plan? HSAs are pretty good too. Grows completely tax free. Even better than tax deferred like 401k. Do you also have a Roth IRA?