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As Charles said, the law referred to in the JOA article was repealed by the signing of HR 4 (Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011) on April 14, 2011.
Don ya just love a good debate??
Also, I may well end up being technically a "RE professional" in 2012, based on hours worked in RE. However, I see no value in having this designation (I don have properties generating tax losses, so I don care about the passive loss limit), and in fact I will make sure I don give the appearance of being a RE professional if it requires me to file a Nike Long Sleeve Compression
Steven (or anyone else) where does it say that being a "RE professional" automatically triggers the 1099 issuance requirement? I thought it was necessitated solely by your being designated as running an "active RE business" (meaning you primarily flip or wholesale).
Could some of the tax Gurus take a look at this link and comment?Although I actively manage my properties isn the income still passive so not considered busiess or trade? I am not a "real estate professonal" by IRS definition and am limited to the 25k passive lost limitation.
Edited Jan 26 2012, 09:41 by David BeardThis is one of the advantages of being a RE professional. Being a real estate dealer and being an RE professional are not the same. Determination of whether a taxpayer is a real estate professional is related to whether the activity is a passive activity. Determination of whether an individual is a real estate dealer is related to SE tax.
I guess the discussion/debate continues.
I found this article which seems to say otherwise. To me it sounds like ANY landlord receiving rental income would be required.
Real estate professionals are individuals who has performed more than half of all the personal services performed in the year were in Real estate trades or business. AND they have performed more than 750 hours of services during the year in real property trades or businesses in which the taxpayer materially participated.
Not to belabor this point, but where does the tax law saw that RE Professional = "active business"? And am I correct to equate RE Dealer status with Nike Tech Fleece Windrunner Hoodie
Rental activities are not subject to SE tax unless the following situation applies.
Once you are a real estate professional, what was passive income is now active income as real estate as a whole is your trade or business. Many CPAs, accountants and EAs like myself agree that you should send out 1099 anyway. This is both CYA and principle. I report my income truthfully and correctly to the IRS, so I want to make sure my contractors do too. It is very possible this CPA is not as experienced(in tax law) as everyone thinks. I hate to discredit them; however, the law requiring landlords to issue 1099 was repealed in April 2011.
Please once again clarify why being a RE professional makes you an "active business". When I hear "active business", I assume this means that I need to pay SE taxes on earnings, can depreciate, gains/losses are ordinary income, etc. (also called being a "RE dealer", I believe, one who primarily buys/sells real estate).
rental income from the real estate held for sale to customers are subject to SE tax.
1099 reporting confusion
having an "active business"
Ok, now I am really confused, last week there was a discussion as to if just a landlord receiving passive income (rental income) was required to issue 1099s and the general concensus was since they were not operating as a business or trade and the income was passive they were exempt.
bunch of 1099 please answer my initial question above. I asked my prop mgr about this, and she said her experienced RE CPA says that all her owners need to file 1099 period! This sounds like CYA advice from this CPA that just creates a lot of unneeded paperwork, as 90% of my PM owners are just investors like me (not primarily flippers/wholesalers/developers, etc.).
Income from rental of real estate is Nike Gray Long Sleeve excluded from the definition of net earnings from self employment and is therefore not subject to SE tax[Reg. 1.1402(a) 4] Exception: An individual who is a real estate dealer is subject to SE tax. A real estate dealer is an individual who is engaged int he business of selling real estate to customers. On the other hand, an individual who merely holds real estate for investment or speculation and receives rental income is not considered a real estate dealer. When a real estate dealer holds real estate for investment or speculation, in addition to real estate held for sale to customers, only the Nike Jackets Mens Sale
The active management of your investment properties does not change the nature of your activity from passive to trade or business. As you stated in your post, you are limited to the $25K passive loss limitation, and NO Forms 1099 are required.
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