Couple of threads with some differing opinions and discussion. Consider the following scenario: Family owns mountain cabin that is rented exclusively and not for personal use. The average rental period is less than 7 days. The family materially participates in the maintenance, resupplying, renting and servicing of the cabin (not a condo maintained by local staff). As I read the regulations, the less than 7 day average rental determines this is not a "rental activity.". After determining this is not a rental activity, the next step is to determine if this is a trade or business and if the family materially participated in that business. Lets assume it is a trade/business and the family passes the material participation test (say 100hrs and no one performs more work). Does this mean the activity should be reported on schedule E? Even if we are on E at this point, the cabin will lose $ each year but is presumed to be profitable based on the appreciation of the asset over the life of the business (once cabin is sold). Can annual loses be deducted against other active income? Will the consecutive loses raise a tone of red flags?
- posted
19 years ago
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