Mobile Home Park - Lot Rent... subject to SE Tax?

[Unregistered]

I have a client that owns a couple mobile home parks. Would his income (lot rent) be subject to SE tax?

[JON]

No

The only exception would be substantial services and how does a mobile home park need that???

[Bees Knees]

Rev. Rul. 83-139, "Trailer park owners; fees for land, services and facilities. Fixed monthly income received by a trailer park owner who provides insubstantial services for the convenience of the tenants is rentals from real estate and not net eranigns from self-employment."

[Unregistered]

Thanks

Thanks everyone.

[Unregistered]

I just had one more thought... The company is an LLC set up to be taxed as an S Corp. I think the intent was to take a wage and forgo some SE tax. Well, if the income is not subject to SE tax, I wonder if this was a wise decision to be taxed as an S Corp. This is his first year of operation. I could probably try to get it changed back but if it doesnt matter, I will simply leave it alone. BTW - he is NOT taking a wage at this time because he really doesn't provide any services to the company.

Any thoughts? Would it be ok to leave as S Corp.?

[Bees Knees]

I don't like owning real property inside of a corporation. The appreciation on the property gets taxed when you try to liquidate the corporation. This does not happen when an LLC taxed as a partnership or sole proprietorship gest liquidated.

[Ken]

mobil home park

I've got another scenerio. I have a client who owns the mobil home park AND most of the Mobil homes in the park. I have still been claiming income on a schedule E for about 15 years.

[JON]

S Corp

Still tax once. There are always wages for managing the park. You can get retirement and health insurance above the line. We have always treated the sales of mobile homes as a Schedule C and the park rental as an E.