I want to stay as a passive investor in an LLC for short term rental of Real Estate

Is there anything in the schedule k-1 that might make me an active member instead ?

What kind of income is ok for passive investors on the k-1?

Any particulars to look out for in the operating agreement to this end ?

  • If the investor doesn't get a salary from the multi-member LLC then the investor is probably passive. Of course the IRS has several pages of rules. The passive investor is still accounted a percentage of the gains or losses but not subject to self-employment tax.
    – S Spring
    May 7, 2022 at 22:36

1 Answer 1


Line 14 shows "self-employment earnings (loss)", that's the income that is attributed directly to your performing personal services for the LLC. Income reported on that line is similar to 1099-NEC income reported to a self-employed individual.

Regarding the operating agreements - consult your lawyer who's drafting it for you. It's a legal document.

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