Trailer Park & SE Tax

[dsi]

I just acquired a new partnership client who owns a trailer park. This client rents out the space for a montly fee, and the tenants bring in their own trailers.

The tenants are long term tenants -vs- short term tenants.

Would you subject the profits to SE tax on the individual partner's 1040?

[JohnH]

I wouldn't, based on what you've posted.

[Chief]

Looks like

a Schedule E to me.

[jimenright]

Trailer park owners usually provide some services

like a clubhouse, laundrymat, road maintenance, utilities, etc.; thus income and expenses go on schedule C subject to SE tax.

[S T]

Trailer Park Rentals

From Pub 334

Trailer park owner. Rental income from a trailer park is subject to SE tax if you are a self-employed trailer park owner who provides trailer lots and facilities and substantial services for the convenience of your tenants.

You generally are considered to provide substantial services for tenants if they are primarily for the tenants' convenience and normally are not provided to maintain the lots in a condition for occupancy. Services are substantial if the compensation for the services makes up a material part of the tenants' rental payments.

Examples of services that are not normally provided for the tenants' convenience include supervising and maintaining a recreational hall provided by the park, distributing a monthly newsletter to tenants, operating a laundry facility, and helping tenants buy or sell their trailers.

Examples of services that are normally provided to maintain the lots in a condition for tenant occupancy include city sewerage, electrical connections, and roadways.

Sandy

[dsi]

Thanks to all of you. In my client's case, there are no services provided to the tenants. No clubhouse, no news letters, no laundromat.

My client maintains the road, and pays the water and sewer costs and that's all.

The tenants are responsible for their own hookups with the utility company.

[taxea]

I agree that this is a business subject to SE. What I don't understand is why so many are opposed to paying SE. It ups the SS when they qualify.

[JohnH]

I'm not opposed to paying SE tax - I just think it's necessary to follow the law.
Based on the facts & circumstances presented and the appicable law, this is schedule E income not subject to SE.

[AJsTax]

Based on the facts & circumstances presented and the applicable law, this is schedule E income not subject to SE.

This is the Correct answer.

[newbie]

taxea, why would you conclude subject to SE tax?

Thanks to all of you. In my client's case, there are no services provided to the tenants. No clubhouse, no news letters, no laundromat.

My client maintains the road, and pays the water and sewer costs and that's all.

The tenants are responsible for their own hookups with the utility company.

From Pub 334
Quote:
Trailer park owner. Rental income from a trailer park is subject to SE tax if you are a self-employed trailer park owner who provides trailer lots and facilities and substantial services for the convenience of your tenants.

You generally are considered to provide substantial services for tenants if they are primarily for the tenants' convenience and normally are not provided to maintain the lots in a condition for occupancy. Services are substantial if the compensation for the services makes up a material part of the tenants' rental payments.

Examples of services that are not normally provided for the tenants' convenience include supervising and maintaining a recreational hall provided by the park, distributing a monthly newsletter to tenants, operating a laundry facility, and helping tenants buy or sell their trailers.

Examples of services that are normally provided to maintain the lots in a condition for tenant occupancy include city sewerage, electrical connections, and roadways.

I agree that this is a business subject to SE. What I don't understand is why so many are opposed to paying SE. It ups the SS when they qualify.