As a result, A should be able to offset the $10,000 income from the building rental, the $15,000 gain from the sale of the book unit, and $35,000 of its
active income with the $50,000 suspended loss and the $10,000 current-year loss from the book unit activity.
Earnings from an active business of a foreign affiliate are computed pursuant to the rules laid down in Regulation 5907(1)(a)(i), which provides generally that the
active income will be deemed to arise where the business of the foreign affiliate is carried on.
Considering their retirement age and average lifespan, people normally have about 30 to 35 working years, when they are able to support themselves, and another 20 to 25 years when they stay idle and don't have an
active income.
Under the draft legislation released in June, income must be derived from or through a "related" foreign affiliate or nonresident company to qualify as
active income to the recipient of the income.
This year, rental income from shopping centers was deemed to be
active income. (21) The S corporation provided various services to the tenants, including utilities and maintenance for the common areas, landscaping, garbage removal and security.
shareholder), the subsequent year's
active income would not necessarily be taxed under the PFC regime (though the passive income would be currently taxed under the Subpart F rules).
In a number of rulings, (21) rentals from industrial buildings, apartment complexes and commercial buildings were all deemed to be
active income. In one instance, (22) an S corporation with AEP owned and leased mining property.
In a number of rulings, (65) rentals from industrial buildings, apartment complexes and commercial buildings were all deemed to be
active income. The decision was the same whether the property was owned directly or indirectly (66) through a partnership or LLC.
If he can participate on a regular, continuous and substantial basis, the losses could offset other
active income and portfolio income.
In various rulings, (51) the IRS deemed rentals from inditstrial buildings, apartment complexes and commercial buildings to be
active income. The decision was the same whether the taxpayer owned the property directly or indirectly.
However, if the member desires to we the LLC loss currently to offset
active income, the LLC loss must be active.
FP is treated as directly owning B's $1,000 of operating assets and $450 of working capital, as well as directly receiving B's $200 of
active income and $25 of investment income.
