Question 2-I was told:
This is why you need to ask specialists, Jerry. Many of our clients have easily recharacterized their passive (Schedule C) rental income as active (Schedule E) active income by declaring some of it as a managerial fee. After all, they are doing managerial work for their own properties, even if it is as little as depositing rent checks. But usually they do a lot more. They never wanted to declare some of it a managerial fee because it has a higher tax rate. However, all a person needs to qualify for the Solo is enough active income to make a yearly contribution of $500. Yes, you pay the higher tax on that. But you now qualify for the Solo 401k and all its benefits. You can double check with your accountant or advisor. I'd be happy to talk to him or her to explain if you want (but I doubt I will; they'll immediately understand).
Any comments on this?
