Anyone hold there CRE in S-corp and not pay self employment
Anyone hold there CRE in LLC taxed as S-corp? Being it is passive income you should not have to pay self employment tax but my CPA tells me I should still pay myself a wage even though I am not doing anything and it is all passive income?

His theory is because it is an S-corp you need to have a salary come out or you run a risk of being audited. It just doesn't make sense to me as it is passive income and they should see all income reported on the 1120s is passive.
[{"id": "ioz0ros", "text": "My CPA thinks I should switch from LLC to Corp entirely in order to avoid self employment tax.", "replies": [{"id": "ioz3pe4", "text": "Sounds like you are a business not a passive income property as no self employment should be on passive income.", "replies": [{"id": "ioz7spt", "text": "True, read this too fast. My mistake.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ioz4w53", "text": "It\u2019s not a theory.  It\u2019s reality.", "replies": [{"id": "iozeqgm", "text": "Even if it is all passive income from rentals that have a management company in place?", "replies": [{"id": "iozluoh", "text": "It depends on the choice of business", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ioz5oxj", "text": "Shouldn\u2019t be self employment on passive income, not sure you have income with cost segregation anyway.", "replies": [], "depth": 1}, {"id": "iozb23m", "text": "You're not doing *anything*? You handed money off to someone, they identified a property, walked it through acquisition (and financing), selected a PM who pays the bills, makes operational decisions, and sends you a check occasionally?\n\nWe could debate what is or is not passive income...but beyond that, what is the perceived benefit here, if you aren't paying yourself a salary? IMO S-Corp is for consulting when you want to underpay yourself and funnel as much as possible to tax-advantaged retirement accounts.", "replies": [{"id": "iozfq47", "text": "It doesn't matter if OP is identifying properties, handling acquisition or financing, selecting PMs, making operational decisions or any of that. Rental real estate income is excluded from the definition of self-employment income per Internal Revenue Code section 1402, unless you are a real estate dealer (i.e. flipping property) or it is farmland.", "replies": [], "depth": 2}, {"id": "iozfsz5", "text": "The benefits of not paying a salary on passive income and having to pay 15.3% on self employment tax. Maybe if I did this I could set up a retirements IRA or something to offset the 15.3% never really though about that. I still think rental income is classified as passive they do not look at how you acquired the property in that case everyone would be considered self employed.", "replies": [{"id": "ip00sgb", "text": "My main question is: Why do you want S-Corp? Over pass-through LLC?", "replies": [{"id": "ip025k6", "text": "I did a 1031 exchange and the selling property was an S-corp \"I know should of never had it that way\" and I had to keep it the same tax payer so I had no choice.", "replies": [{"id": "ip026oo", "text": "Hello, it looks like you've made a mistake.\n\nIt's supposed to be could've, should've, would've (short for could have, would have, should have), never could of, would of, should of.\n\nOr you misspelled something, I ain't checking everything.\n\nBeep boop -\u00a0yes,\u00a0I\u00a0am\u00a0a\u00a0bot, don't botcriminate me.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iozf0t6", "text": "Don't hold real estate in an S Corp. An S Corp is required to pay a reasonable salary. It is designed for operating businesses, not for passive income.", "replies": [{"id": "iozmyix", "text": "Investment in real estate is always very limited", "replies": [], "depth": 2}], "depth": 1}, {"id": "ip047n9", "text": "My CRE is in LLPs. 1% GP interest is held by a corp (LLC), which is ultimately owned by me and is disregarded. 99% LP interest held by corp that is owned by irrevocable trust. Split the income however you want and the appreciation of the property will be estate tax free one day.", "replies": [], "depth": 1}, {"id": "ip08ho3", "text": "If I were you I would much rather hear what the people on r/accounting have to say than a bunch of random people with commercial real estate interests\n\nThat being said CPA\u2019s don\u2019t usually \u201ctheorize\u201d", "replies": [], "depth": 1}, {"id": "ip0uac8", "text": "S-corps are required to compensate officers a reasonable W2 wage for the services offered to the Corp.  It does trigger audits when that doesn't happen. I'm sure you could do it, would be wise to seek legal/accountant counsel in whatever jurisdictions you pay taxes to in order to optimize your entity structure in the most legally advantageous way you can.", "replies": [], "depth": 1}, {"id": "ip2plhi", "text": "You can go to r/tax and they may have a bit more clout for you.", "replies": [], "depth": 1}]