Which of the following taxpayers will report their rental income on Schedule C? Jason has short-term...

Which of the following taxpayers will report their rental income on Schedule C?

Jason has short-term rental units in his home and provides substantial personal services for all tenants.

Karen makes management decisions regarding her rental and participates in the activity for more than 500 hours.

Tom, a real estate professional, rents several single family homes without personal services provided and doesn't sell real estate in the ordinary course of business.

Levi turned his personal home into a rental after making some repairs and improvements.

karen is wrong answer. so please help me to choose the right one.

Solutions

Expert Solution

Rental Income on Schedule C

IF you provide substantial services that are primarily for your tenant's convenience, report your income and expenses on Schedule C (Form 1040 or 1040-SR), Profit or Loss From Business (Sole Proprietorship)

Therefore, Jason shall report their Rental income on Schedule C, because he turned his personal home into a rental after making some repairs and improvements which suits the reason explained above.

Why Not Other Option?

Karan decided managerial decision and participates in the activity for a certain period has not compromised with the requirement to fill his rental income on Schedule C, These events are regular role not considered as substantial services
Tom, rents several single-family homes WITHOUT personal services provided, Hence will not acceptable for Schedule-C Rental Income.
Levi turned his personal home into a rental after making some repairs and improvements, which is to be considered as services before tenancy, and not confirms which he provides any substantial services to the tenants.

Hence, Jason would find his rental Income on Schedule C.

ekkarill92 answered 1 year ago

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