Research Problem 1 Chapter 12: Alice owns 100 percent of Medical Data, a C corporation, and 100 percent of Your Realtors, an S corporation. She worked full time for Medical Data (i.e., she materially participated in the entity), but Alice did not materially participate in Your Realtors. During the tax years 2014 through 2016, Your Realtors leased real estate to Medical Data.

Alice reported these rental amounts as passive activity income on her Schedule E, and she offset that income against passive activity losses from other entities. The IRS reclassifed this rental income as nonpassive income under Reg section 1.469-2(f)(6). Who is right? Does section 469 apply to S corporations? Elaborate

This question is from Chapter 12, Research Problem 1 from 2017 South Western Federal Taxation, Corporations, Partnerships, Estates, and Trusts (by Hoffman)

I believe the question is asking if section 469, specifically 469-2(f)(6) applies to S corporations. This question is also asking me to provide support for my answer using the tax code.