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Rentals Not Treated as Passive Investment Income for S Corporation Purposes

Rentals Not Treated as Passive Investment Income for S Corporation Purposes

Author: Frank L. BrunettiDate: July 12, 2017

In PLR 201725022, a corporation received rental income from its leasing of offices for medical and related services.  The taxpayer intended the rental income from its maintenance-related operations as non-passive investment income under section 1362(d)(3)(c)(i).

X was incorporated as a C corporation. X had accumulated earnings and profits. X intended to elect to be an S corporation. X was in the business of acquiring, developing, leasing and managing commercial real estate, concentrating in medical office suites and clinics.

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