Passive Income Tax LLC

[Diego Mishler]

So I was reading an article where they were saying that money received from rental properties for example is considered passive income. My question is, if I have an LLC which I want to own my rental properties and the LLC gets taxed as an S-corp, would the money received from the LLC be considered passive or will it now be earned income?

[Ashish Acharya]

Originally posted by @Diego Mishler:

So I was reading an article where they were saying that money received from rental properties for example is considered passive income. My question is, if I have an LLC which I want to own my rental properties and the LLC gets taxed as an S-corp, would the money received from the LLC be considered passive or will it now be earned income?

It would still be Passive unless you are a real estate professional and meet the other requirements such as material participation rules. 

Also you might want to talk to a professional why you don’t want your rental in the S-Corp.