Schedule E Loss Not Allowed

[Tentman]

Hello All:

When is a schedule E loss not deductible.  I don't do a lot of returns with rental properties.  I set up a new rental property for a client, it calculates a loss, but it is not allowed.  I can't figure out why.  Any help will be very much appreciated.

Thanks

The Tent Man

[sjrcpa]

Passive loss rules. Look at Form 8582.

[Tentman]

Thanks SJRCPA

[sjrcpa]

You're welcome

[TaxGuyBill]

However, in most cases, the taxpayer "Actively Participates", which sometimes allows the loss (depending on their income).  Assuming your client "Actively Participates", be sure to check that box.

In the event it is a rental for short-term stays (average stay of 30 days or less), then are additional things to be aware of, but I won't go into those until it applies to you.

[Tentman]

HI Tax Guy Bill,

Thanks for responding.  I did have the boxes checked for active and material participation.  I think it was due to the clients wages (375K).  I removed the wages and the loss was allowed.  Put the wages back in, and no loss allowed.  Form 8582, line 5 shows any income greater than $150,000 will make the rental loss disallowed.

Thanks again.

The Tent Man