Less than 15 day rental

[kathyc2]

Client has house that is rented out a few weekends, but less than 15 days. The income from this is excludible, but client has received 1099 misc w/ 7K rent income.

1) I can put 7K on E with 14 days, and have off-setting expense in same amount w/ description of less than 15 day exclusion. However, software won't let me e-file because it thinks E is in error. Would need to paper file, and there is a decent refund involved.

2) I could put 15 days to allow e-file w/ supporting statement that was actually 14 days and excludible.

3) Even though not Schedule C, I could show 1099 income there and again have descriptive offsetting expense.

Any ideas or experience in doing 2 or 3?

[Gene V]

One way
Show the income on line 21 of 1040 and deduct the income on line 36 with statement rental income less than 14 days
or
show income on line 21 and show deduction on line 21 with statement rental income less than 14 days, etc.

[Kram BergGold]

I Believe this is a Better Approach

Report the income on Schedule E as rent and then on Schedule E line 19 type, rental 14 days or less and the rent reported. This will wash the rent off the return and keep the IRS at bay.

[kathyc2]

Good call Gene! I figured out how to put it into software so both the positive and negative lines show up right on 1040.

Kram, the problem I was running into w/ that was software not allowing e-file when I put 14 as fair rental days on E.

Thanks! Turns out I was trying to make it harder than it actually was.

[Kram BergGold]

Warning

Based on my experience your approach will not work. Even though two distinct numbers show up on line 21 the effect in the right hand column is zero. This is what the IRs sees. They do not see the two lines. You should warn the client that a CP2000 will probably be sent to him.

[taxea]

No the IRS computer is looking for a matching amount on the 1099...as long as it finds the 1099 has been reported it won't generate a letter if it is backed out.

[Gene V]

Kathy
I preferred to show income on line 21 and subtract on line 36, I have done it both ways, either way works.

Per instruction the IRS tells you not to use schedule E for rental income under 14 days.

[kathyc2]

Awesome! I never realized there was a way to put a misc deduction on line 36 before.