When Form 1065 Schedule M 3 Capitalized 2021-2023

Instructions and Help about When Form 1065 Schedule M 3 Capitalized

We have a vacation rental that we're rehabbing if we form an LLC to collect rents so this is where I get confused you're rehabbing a property but now you're collecting rents in my world those are two different business activities and this LLC is owned by a corporation I would never rent a property that's owned by a corporation what role would the corporation play how do the funds actually get from the customer to us personal so this is where there's a few questions do you have an answer you want to give on this one first well I think in this case we're saying that the LLC that's collecting the rents more or less the property manager is owned by the corporation that might be the case in which case it should not be owned in that same LLC right you don't want your rentals in your corporation don't any way shape or form yeah and the reason being is because if you ever take it out it's considered wages to its it's actually it's like active ordinary income but in this particular case there's an LLC owned by the Corp usually what we're seeing is it's not owned by the corporation but it's managed by the corporation and so we'll have an LLC that rehabs and does rentals and it has a corporation that's collecting the rents doing all the repairs doing it taking care of all the expenses associated with it and then it Nets out just like a property manager would and gives you the difference yeah and I think we're used to hearing the term rehab use for people who are flipping properties yep and if you're flipping and more power to you you would just the relationship between the LLC and the...