The SMLLC is considered a disregarded entity for income tax purposes and is still treated as if the individual owns the interest in real estate.

Because of this Congress believed that a rental real estate investment in which a taxpayer has significant responsibilities and which served a significant non-tax purpose should be treated differently than the activities meant to be limited under the passive loss provisions.

You do have to make payments based on a 5-year schedule or the loan could be treated as a premature distribution with tax and penalties. 8)

You must treat this as a business, not a scratch off lottery ticket.

I also wanted to know how entities get treated as opposed to individuals in that regard.

You don't have accelerated depreciation anymore so therefore no recapture.You don't want to have any rental income in the S-corp because that is passive income and you can have a good chance of falling into the passive income rules under the S-corp and be subject to passive income penalty tax.Have you had any consulting on how to treat each of your properties?

This account is not an escrow for the paying of real estate taxes, insurance premiums, delinquent notes, ground rents or assessments, and is not to be treated as such.

The IRS often gets involved with short sales, because they are seen as a relief of debt and may be treated as income.

Folks treated it like a hotel.

But I agree you gotta play by the rules, I'm seeing guys drop left and right, a lot of it is because of the economy but part of it is because they try to cut corners and not treat it as a business, I'm grateful for my contacts and try to do my part to keep them, seems to work well, I am able to stay busy without advertising :D