Property Management Companies - Schedule E or C

[Judy rocks]

A real estate broker client has a small property management company. He owns none of the properties. The properties are of clients who he did the sale for. Is this reported on Schedule E or C?

[TAXNJ]

Think it through

A real estate broker client has a small property management company. He owns none of the properties. The properties are of clients who he did the sale for. Is this reported on Schedule E or C?

Think it through. Whose rental income and property expenses? does the property management company collect and disburse that income to the client?

Does the real estate broker receive a 1099misc from the clients for services rendered?

[Judy rocks]

No 1099

Think it through. Whose rental income and property expenses? does the property management company collect and disburse that income to the client?

Does the real estate broker receive a 1099misc from the clients for services rendered?

He doesn't receive a 1099.
He collects rents for 3 properties he doesn't own.
He pays bills including a fee to himself
He send the balance (after his fee and the property expenses) to the owners.
He sends a 1099 to the owners for the balance

[TAXNJ]

Interesting

He doesn't receive a 1099.
He collects rents for 3 properties he doesn't own.
He pays bills including a fee to himself
He send the balance (after his fee and the property expenses) to the owners.
He sends a 1099 to the owners for the balance

Is this a new client and if not do you have copies of prior returns?

Based on the information, schedule C. I think the management company serves as a conduit for the owners.

as to the 1099 - what type is sent to the owners? And the management company does not receive a 1099?

How does the owners report the property expenses?

This interesting

[Judy rocks]

Is this a new client and if not do you have copies of prior returns?

Based on the information, schedule C. I think the management company serves as a conduit for the owners.

as to the 1099 - what type is sent to the owners? And the management company does not receive a 1099?

How does the owners report the property expenses?

This interesting

A 1099 Misc is sent to the owners.
Not sure how the owners report the property expenses.
He provides them with a detailed spreadsheet.
So most likely they report the Income in full and the expenses along with depreciation.
But my client deposits the checks in his account.
Does he have to account for these deposits by sending the owners a 1099?
He uses a Brokers Trust account does this have different rules?

[Judy rocks]

Think it through. Whose rental income and property expenses? does the property management company collect and disburse that income to the client?

Does the real estate broker receive a 1099misc from the clients for services rendered?

The rental income and property expense do not belong to my client.
The property management collects and disburses income to the owner.
So you are saying he should only be reporting his income from the client.

No the Real Estate Broker does not receive a 1099 from the client.
He has been sending the client a 1099 for the amount he sends them.
Maybe he shouldn't be sending the 1099 to the owners.
He deposits the rent checks in a brokers trust account.

[TAXNJ]

Thinking

The rental income and property expense do not belong to my client.
The property management collects and disburses income to the owner.
So you are saying he should only be reporting his income from the client.

No the Real Estate Broker does not receive a 1099 from the client.
He has been sending the client a 1099 for the amount he sends them.
Maybe he shouldn't be sending the 1099 to the owners.
He deposits the rent checks in a brokers trust account.

Without knowing all the facts but you seem to have a good handle with gathering the facts.

Let's take this scenario

Mgt Company:
Broker Trust account handles rental income and rental expenses. It accounts for incomes and expenses of the owner that the mgt company can provide the accounting to the owner along with any invoices. As a result the owners will have information for their tax returns.

Form 1099 to owners for reporting on their return show rents (income) received (from broker trust account)

Form 1099 to broker for their return tax shows commissions/fees received from owners

This help?

[taxea]

he provides a service-managing property. It is a Sch C. The owner, his client, would have a Sch E

[TAXNJ]

Generally

he provides a service-managing property. It is a Sch C. The owner, his client, would have a Sch E

Generally, provides a service-managing property. So for purposes of this scenario It is a Sch C. If that is the tax entity of the management company.