Trying to wrap my head around the requirements to take tax deductions against a car rental activity (e.g Turo) and how it would affect other (w2) income.
The IRS states "In general, rental activities, including rental real estate activities, are also passive activities even if you do materially participate." (https://www.irs.gov/taxtopics/tc425)
A different article mentions "You can only deduct your expenses from renting your car if you're self-employed." (https://www.thebalancemoney.com/car-rental-income-3193073)
So if I had a full time W2 job and a single member LLC where I rent cars (a business meant to make money and where I materially participate), would I be able to depreciate a vehicle and deduct maintenance, etc.., against business income and flow any potential losses over to my W2 income? Or are business expenses/depreciation only taken against business income, with a maximum loss equal to income?