Renting property to a corporation you own may not get you a tax break.
You can’t always use the net rental income to offset other passive losses, as demonstrated by this case where a man set up two pass-through businesses to lease tractors and trailers to his corporation.
Because his firms rented property to a closely held corporation in which he worked more than 500 hours per year, that triggered a special rule that treats the net rental income as nonpassive income. Although many of the rentals were profitable, some produced losses. Nevertheless, the Service recharacterized only the net rental income (Veriha, 139 TC No. 3).
