Motel "Rental"

[abctax]

I've searched, and read threads, Regs 1.469, Pub 527, TTB, etc. and I have no doubts that a motel rental has to go to Schedule C, rather than a Schedule E. But they all seem to be directed towards loss issues, and whether they can be deducted.

My issue is whether reporting on Sch C automatically makes the profit subject to SE tax - absent material participation in the day to day operations of the motel.

My client lives 2000 miles from the motel; and is obviously not changing the sheets or cleaning the rooms. He pays a manager to run the place for him.

Bees Knees posted on 01-10-2008 a response that leads me down the path to thinking it might not be subject to SE. (I'll post the link if I can figure out how - the thread is "Repost-When not a Rental").

http://www.thetaxbook.com/forums/showthread.php?t=6911&highlight=repost-when+rental

Any/all opinions welcome - My client bought this motel without consulting me (surprise!), and now has a large profit which is generating a correspondingly large SE tax liability.

[S T]

No Answer

I don't have an answer for you, but you might want to try to review this link
http://www.irs.gov/pub/irs-mssp/pal.pdf It is the MSSP Audit Tech guide on "PALS"

Sandy

[dsi]

No cites, but I would contend that your motel owner is in the business and the activity should be reported on Sch C.

I have had motel clients, but they all operated the business full time. That being said, I would tend to believe that your client is still subject to SE tax on the profits.

[abctax]

Thanks

to all, for helping me confirm my thoughts. The next move is likely a Cost Segregation Study.....

[newbie]

check out this thread -

http://www.thetaxbook.com/forums/showthread.php?t=11991&highlight=cabin+rental