LEASING ASSETS TO A CORPORATION CAN SOMETIMES PROVIDE A TAX BREAK

The net rental income can offset other passive losses, the Tax Court says, if the corporation uses the property in its own rental activity.  Here, a business owner rented towers to his cellular phone firm, and the company leased space on the towers to other firms.  That lets the owner treat the income from the profitable tower rentals as passive income, which he can use to soak up passive losses (Dirico, 139 TC No. 16).  But net income from leases of land to the company is treated as nonpassive income.