Is real estate commission income from LLC self-employed income or passive income?

Forum|Forum|6 months ago
December 18, 2025
3 replies
12 views

Hi,

My new client, husband and wife both have a full time W2 job, formed LLC last year in real estate brokage business, They both actively involved in managing and renting the property for the property owner and operate the business daily, can they report the commission income as self-employed income or passive income on K1 for the LLC? The net income is about $54k

Also on the side, the husband is a licensed real estate agent and earned $34k commissions , they reported on Sch C, as a full time W2 real estate agent, is this self-employed income or passive income?

Anyone comments are very appreciated!

ProConnect Tax

Accountant-Man

Level 13

Why would you think it's passive income? Do some other people do the work and he just sits by and collects the money?

What is your definition of passive? The commissions are not rental income.

So H gets a W2 for full time job, have an spousal LLC for property management, and he works as a licensed real estate agent and files Sch C for those commissions. Is this right?

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PhoebeRoberts

Intuit Community Champion

You should refer this client to someone who does more real estate work. If these are the questions you're asking, there are going to be a bunch of things you miss because you don't know what questions to ask.

qbteachmt

Level 15

You could start here:

https://www.irs.gov/faqs/small-business-self-employed-other-business/entities/entities

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