Passive or Active

[Bird Legs]

Retired couple, own 4 rent houses, own a ranch and lease it out for deer hunting.
Also own about 100 boat ramps that are all leased out which bring in about $14,000.
a year by themselves. Are all of these activities reported on Sched. E or would any
of them go on Shed. C?
Thanks for your help with this.

[Chief]

Rental income

Bird Legs:

Speaking of the top of my head I would say all this income would be reported on Sch E as rental income.

[Bill Tubbs]

Any personal services?

If they provide any personal services, then it would be Sch C. But if they're just renting the ranch and boat ramps with NO personal services, then Sch E.

Bill

[Armando Beaujolais]

If they provide any personal services, then it would be Sch C. But if they're just renting the ranch and boat ramps with NO personal services, then Sch E.

Bill

I disagree with the "any" personal services throwing the entire activity to Schedule C. The taxpayer can provide minimal services without creating a self-employment situation.

There's a ruling that addresses the rental vs. self-employment activity for trailer parks. One trailer park provided minimal services such as towing mobile homes to their lots and hooking up service. The taxpayer's services were determined to be insubstantial, and the activity was rental.

Another trailer park provided common recreational facilities, and other services on a continuing basis. That activity was self-employment.

As far as the real estate rental, it's not subject to SE tax unless the income is from activities of a real estate dealer.

[Bees Knees]

Bird Legs asked two completely different questions.

1) Is the activity passive or active?

2) Is the activity reported on Schedule C or E?

You can have a passive activity reported on Schedule C. All rentals by default are passive activities, even if reported on Schedule C with material participation. The exceptions are listed on page 7-10 in TTB, such as rentals of seven days or less (auto and boat rentals).

So, if the boat ramps are rented out for the entire season, it would be a passive activity. If they are rented out on a short term basis, such as for only a few days at a time, it could be a non-passive activity.

Schedule C or E is based on whether or not it is a real estate activity. Rental of real estate goes on Schedule E, regardless of active or non-active participation. Rental of equipment, boats, cars, etc. goes on Schedule C, even if it is a passive activity.

[JON]

Confused

a Motel is rental of real estate, but goes on C because of services and the time period of the rental. Trailer park-is rental of real estate, pads, I have always thought it will be on Schedule E based on the lenght of the lease term(long). It would get to Schedule C if short term rentals (vacation spots). Accompaning servies also have a paly.

The one I am acquainted with all of the lot rentals are 3 years or longer. Most of them have been built on to the pad to a point where movement is almost impossible. This one has been audited before my time and once since my time and Schedule E was never questioned. There is subtantial expenses keeping the park running and it has never been addressed under audit.

[Bees Knees]

A Motel is more than just a rental of real estate. Maid service where they clean your room every day.

That is way beyond rental of real estate.

That's why it is a Schedule C.