Question

Form 4797 show PAL on Line 14 when my rental activities are not Passive

Forum|Forum|5 years ago
March 2, 2021
1 reply
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TurboTax is showing a PAL designation on Line 14 even though my Rental Business is considered a business as is not Passive. Actually the majority of my losses are from a business activity, non-passive, which is a mobile home park that I own and operate. I'm wondering if the second rental property that I own is throwing this into the PAL classification as it IS a passive income property, however, for the purposes of QBI, I have linked them as an Enterprise, so should I select that the Rental Home be NON-Passive as well?

I hope this makes sense.

Thanks

WendyN2

Yes, as you are an active participant in this property according to IRS rules. Per IRS, "A taxpayer is considered to actively participated in a rental real estate activity if the taxpayer, and the taxpayer's spouse if filing joint, owned at least 10% of the rental property and you made management decisions in a significant and bona fide sense."