Where To Show Rental Income?
Hello,
I have about 30 rental houses.
Is it better to show the rental income as income to my S Corp? or my personal 1040?
Will $0.00 rent raise flags, since I have so much interest and depreciation deductions on my personal 1040?
Best Regards,
Douglas Hauck[ Edited by JohnLocke on Date 04/06/2005 ]
I am not a CPA, but I can tell you this much. It all depends on who owns these properties. You as individual or your s-corp whcih is a totally separate entity. [ Edited by SmileyFace on Date 04/06/2005 ]
Quote:Is it better to show the rental income as income to my S Corp? or my personal 1040?Six of one and a half dozen of the other. The S-Corp is a pass through entity and does not pay taxes in its own right. Instead all the income flows through to your personal 1040. If you need a business entity for your rental holdings, consider an LLC established as a disregarded entity.
Quote:Will $0.00 rent raise flags, since I have so much interest and depreciation deductions on my personal 1040? Yes, zero :"rent" will raise red flags if you are not actually operating a rental property. I assume you really meant to ask if a zero or negative net income will be cause for concern for the IRS. The answer is no.
However, if you are operating at a negative cash flow, then you may want to evaluate your investment criteria and reconsider whether you still derive any benefit from holding onto properties that drain cash from your pocket.[ Edited by NewKidinTown2 on Date 04/06/2005 ]