Private Lending - Passive Losses on Schedule E

[Harsha G.]

Hi All,

Is there any way to structure a private lending arrangement so that income is considered passive (by IRS standards) and can offset accumulated schedule E losses? Perhaps as a syndication or credit fund? 

[Chris Seveney]

Quote from @Harsha G.:

Hi All,

Is there any way to structure a private lending arrangement so that income is considered passive (by IRS standards) and can offset accumulated schedule E losses? Perhaps as a syndication or credit fund? 

 In 8+ years the answer to us has always been No. Its interest income - unless you wanted to run it through a C corp but then you pay corp tax first.

Other option is to use a deferred retirement account.