Sign Rental

[geekgirldany]

Client received income from two companies around $1,500 for allowing them to put a sign on his property. It is property he owns but does not have his main residence there. Just land he owns.

I want to make sure that this would be reported an rental income Sche E and not Sch C self employment.

[Maribeth]

I have had several clients that had the same sort of arrangement with a sign company. Have reported that income on Sch E.

[geekgirldany]

Thank you!

[taxea]

Since there are no expenses I would think it would go on Ln 21 1040. I don't think this would honestly be considered a Sch E rental. What they are trying to do is skirt SE taxes. What is the justification as Sch E income?

[Maribeth]

Vacant land put to some good use by having a sign placed on it. Land held for investment. There is no way I would put it on a Schedule C.

[geekgirldany]

Nah, he isn't trying to get away from paying SE taxes. He is relying on me to report it correctly. He only showed me where he did get the income. I could see though how it could possibly be looked at as Sche C income. As such my posting.

After researching some more I found the following:

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Passive-Activity-Loss-ATG-Chapter-3-Passive-Income

and

http://www.journalofaccountancy.com/Issues/2013/Feb/TaxMatters.htm

Land Rental for Cell Towers

It seems that according to the irs.gov link above that it is actually non passive.

I'll have to read some more but it could actually go as other income.

[Roland Slugg]

I'd report it on Schedule E ... land rental, property type 5.