Question or Topic 

You may contact Bob Parrish by email, USA Mail, Fax, telephone or request a meeting

The Question:

Objectives

Related Articles

The Answer

Rents from Personal Property

If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is generally determined by:

1. Whether or not the rental activity is a business, and

2. Whether or not the rental activity is conducted for profit.

Generally, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. See Publication 535 for details on deducting expenses for both business and not-for-profit activities.

Reporting business income and expenses. If you are in the business of renting personal property, report your income and expenses on Schedule C or C-EZ (Form 1040). The form instructions have information on how to complete them.

Reporting nonbusiness income. If you are not in the business of renting personal property, report your rental income on line 21 of Form 1040. List the type and amount of the income on the dotted line to the left of the amount you report on line 21.

Reporting nonbusiness expenses. If you rent personal property for profit, include your rental expenses in the total amount you enter on line 32 of Form 1040. Also enter the amount and "PPR" on the dotted line to the left of line 32.

If you do not rent personal property for a profit, your deductions are limited and you cannot report a loss to offset other income.

Generally, cash or the fair market value of property you receive for the use of real estate or personal property is taxable to you as rental income. Income and expenses related to real estate rentals are usually reported on Schedule E Form 1040. Income and expenses related to personal property rentals are reported on Schedule C Form 1040 or C–EZ Form 1040 if you are in the business of renting personal property.

How To Report Rental Income and Expenses

If you rent buildings, rooms, or apartments, and provide only heat and light, trash collection, etc., you normally report your rental income and expenses in Part I of Schedule E (Form 1040). However, do not use that schedule to report a not-for-profit activity.

If you provide significant services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business or Schedule C-EZ, Net Profit From Business (This makes the income subject to the self-employment tax (FICA and Medicare).  Significant services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. For information, see Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ). You also may have to pay self-employment tax on your rental income. See Publication 533, Self-Employment Tax.

Generally the rental of personal property will subject the net income to the FICA/Medicare or the Self-employment tax.

Solutions

Solutions are dependent upon facts & circumstances, law and the objectives.  These elements vary from one time to another, from one circumstance to another and from person or entity to another.

Kit to Prepare for Your Adviser

 Engagement Status Letter ~ WARNING!

Navigation

    Privacy Statement

Email Bob; Write a Letter to Bob; Fax Bob; Call Bob; Bob Parrish CPA, P.C. Warning;