Consulting Income in Rental Real Estate

2 Replies

We have an LLC holding our 10 rental properties. My husband, single member, gave consulting advice to a friend with respect to the rental real estate business and helped him acquire properties, set up an LLC etc. and was paid to do so.

Would this income he received be considered passive, and reported on Sch E within our LLC? If so, would it be spread out as 'other income' across the properties? Should this friend send us a 1099-Misc? Want to confirm that it would not be subject to SE taxes....

Originally posted by @Jennifer Bott :

We have an LLC holding our 10 rental properties. My husband, single member, gave consulting advice to a friend with respect to the rental real estate business and helped him acquire properties, set up an LLC etc. and was paid to do so.

Would this income he received be considered passive, and reported on Sch E within our LLC? If so, would it be spread out as 'other income' across the properties? Should this friend send us a 1099-Misc? Want to confirm that it would not be subject to SE taxes....

 That is not a schedule E income. IT is an ordinary income subject to Selfemployment taxes. 

It will be reported on page one of 1065 if you file partnership return or on schedule C of your personal return if you file 1040 for disregarded entities.