Is equipment rental considered a passive activity?

Forum|Forum|2 years ago
May 1, 2023
2 replies
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My wife and I have a trailer rental company. The company is registered as LLC and we are 50/50 partners. The trailers are rented out to my trucking company which is single member LLC. There is not really much work involved and we virtually spend no time running the rental business. Is this considered a passive activity and if it is where do we put it in the turbo tax business and what are repercussions tax wise? Thank you

Best answer by Mike9241

I agree consult a tax professional. one issue is whether the trailers are personal property or real property under state law. here's my $ 02. the self-rental rules would apply. income is non-passive but losses are passive. income from personal property rental is subject to self-employment tax but not for real property.

Carl11_2

Employee

Basically, the rental business produces non-passive income. However, because you have ownership in both the the business you rent to, and the business you rent from, there are special tax considerations that must be taken into account, which I myself am not all that well knowledgeable on. I would highly suggest you seek professional advice from a local tax professional or CPA. This would be especially recommended if your state also taxes personal income.