---

@david3 wrote:

then it isn't a rental activity.

This appears to support Lisa's position that it isn't reported on Sch. E but on Sch. C.

 

Also, the TPs don't use the property for personal use and they don't meet the material participation test but they do meet the active participation test.

Does the rental qualify for deduction of the full loss on Sch. E?

---

No, as I said in my original comment, it is not a "rental activity" ONLY for purposes of passive income/loss purposes. For other purposes, it *IS* still a rental that belongs on Schedule E.

If they don't Materially Participate, it is a Passive Activity.  That means you DON'T check the "other passive exceptions" because it *IS* passive.  It will be subject to the usual Passive Activity rules.