TaxGuyBill
Level 15

I have a question about this topic.  For some reason, I had stuck in my mind that all rentals within a Partnership or S-corporation were counted as ONE activity and couldn't be separated.  Apparently that was wrong.

However, I am still missing something.

The instructions give two scenarios.  The second one is where they are separate activities.  But for the first one, it says:

"For purposes of the passive activity limitations, the partnership grouped both buildings into a single activity".

 

Question #1:  Isn't the passive activity limits on a individual basis, rather than on the entity level?  If so, I don't understand HOW the Partnership could group them.

Question #2:  If the Partnership CAN group them, WHY would it?  Shouldn't the Partnership not group them and then let the shareholder determine if they want to group them or not?  Or is that not allowed?

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