Federal Tax News Post for June 27th
Rentals not treated as passive investment income for S corporation purposes. In some cases, having too much passive income, which may include rent, can cause an S corp to lose its S status. But rents included in the definition of passive investment income for S corp purposes exclude those derived in the active trade or business of renting property. The IRS has privately ruled that a corporation’s rental income from owning and operating a medical office complex won’t be treated as passive investment income for S corp purposes. (PLR 201725022)