"Conversion" of Passive Income into Earned Income

[Guest San Diego Benefits Guy]

A retired client is receiving income from a limited partnership that was engaged in a large condominium conversion project. The individual will receive a substantial distribution from the limited partnership this year. It is not possible to treat this individual as a real estate professional. He would, of course, love the amount to be treated as earned income so that he could establish a defined benefit pension plan. I was wondering if anyone had ever looked at aggressive planning opportunities that might exist in this type of situation.

In the past, I have heard of individualds who might contribute their limited partnership interests to their c-corporations that might mantain a defined benefit pension plan.

Any thoughts on this issue would be appreeciated.

Thanks. Ed