Let’s say you own the building.
Now, let’s say that you rent this building to your business.
With no tax planning, you have a self-rental, and that
makes rental income from this building nonpassive, meaning that it cannot offset any passive losses (very bad); and
makes rental losses from this building passive losses, meaning that you likely cannot deduct the losses this year (also very bad).
So, there you have it: with no tax planning, you get the worst of both worlds.
But wait—there’s a solution (often overlooked).
Under a special grouping rule, you ... Log in to view full article.