@Ashish Acharya
Thanks so much for taking the time to write that thorough answer. Very helpful. I think in our case the aggregation election would make sense -- we won’t have to worry about the disposition rule because we shouldn’t have suspended passive losses. The aggregation election will make it easier for me to meet the 750/500 hours requirements under the real estate professional rules, and any rental real estate losses will presumably offset some of my husband’s W-2 income (rather than becoming suspended passive losses).
BTW, the third special rule in that section, 1.469-9(h)(3) states: “If a pass-through entity owns a fifty-percent or greater interest in the capital, profits, or losses of another pass-through entity for a taxable year, each interest in rental real estate held by the lower-tier entity will be treated as a separate interest in rental real estate of the upper-tier entity, regardless of the lower-tier entity's grouping of activities under § 1.469-4(d)(5).”
Am I right that this has nothing to do with the aggregation election for real estate professional? I.e., if you had tiered pass-through entities, a real estate profession could still treat the rental real estate interests held through the upper pass-through entity as a single real estate activity together with her other rental real estate activities?
This stuff is complicated . . . .
