AB150 on rental and investment activities - Spidell

AB150 on rental and investment activities

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Message Board AB150 on rental and investment activities

  • This topic has 1 reply, 2 voices, and was last updated 2 weeks ago by Gerald Weiss.
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    • #323940
      Robert Ades
      Participant

      Two related questions on AB150

      1. H&W own various residental rental properties, each in it’s own LLC, reported on Schedule E.  If the LLCs go into new partnerships which only report rental activities, will the 9.3% PTE tax deduction reduce the net rental income on the K-1?
      2. H&W have a joint investment portfolio that throws of interest, dividends and capital gains.  If they put the portfolio into a PTE and pay the 9.3% tax, how will the tax reduce the investment income on the K-1?
    • #323953
      Gerald Weiss
      Participant

      Current thinking produces a very strange result. The CA PTE 9.3% tax would be in K-1 Box 1 ( reading of IRS Notice 20-75) while the rental income would be in Box 2 and/or investment income income in say Boxes 6, and 9. Result also appears to circumvent the passive loss and capital loss limitations in some scenarios with large passive or capital loss carryovers at the 1040 level. Result might get clarified if IRS ever comes out with their promised PTE regulations.

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