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I have active and passive income in same company "O" and will soon surpass the 50K new limit. If I start a separate company "H" for future passive investments will the new companies passive income still cause my "O" company to lose some small business tax rate (cause I own both ) or because they are separate they wont effect each other ?
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Thank you
Since the 2 companies are associated (they are both owned by you), they will affect each other. If the total passive income of all commonly controlled companies is more than $50,000, the small business deduction limit will be reduced for your active business.