Does 469 apply to s corporations

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Research Problem

Alice owns 100 percent of Medical Data, a C corporation, and 100 percent of Your Realtors, an S corporation. She worked full time for Medical Data (i.e. she materially participated in the entity), but Alice did not materially participate in Your Realtors. During the tax years 2015 through 2017, Your Realtors leased real estate to Medical Data.

Alice reported these rental amounts as passive activity income on her Schedule E, and she offset that income against passive activity losses from other entities. The IRS reclassified this rental income as nonpassive income under Reg. 1469-2(f)(6). Who is right? Does 469 apply to S corporations? Elaborate.

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Reference no: EM131715296

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inf1715296

4/1/2018 6:14:16 AM

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len1715296

11/10/2017 1:42:49 AM

I had to type the question out on word and I have to have court cases that support my facts right along with Regulations of the tax code No Of Pages - 2 pages. this is Graduate Grade Level problem. The IRS reclassified this rental income as nonpassive income under Reg. 1469-2(f)(6). Who is right? Does 469 apply to S corporations? Elaborate.

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