Sch C or E

[Brian EA]

• Client has a Antique Business - They rent the space where they have the store.
• The Clients rent booth space within their store to other people who have antiques. The other people who rent sell their antiques but they don't have to be there to sell them; my clients collect the money and take a commission from the sales. My clients collected $18,795. in rent. Should I put this on a Schedule E?
• My Clients also have antiques through out the store that they also sell, so they use the space too.
• They are not incorporated, they file Schedule C for each them, they are husband and wife.
• If I put the money on a Schedule E, they would not pay Social Security tax on it.
• Any advice would be greatly appreciated.

[TaxGuyBill]

my clients collect the money and take a commission from the sales.

That's providing services, which is subject to SE taxes on Schedule C.

[Jiggers]

I agree, Schedule C.
And if you were to try to put the rent on Schedule E, you would have to allocate the overhead expenses, depreciation, utilities, etc. to the Schedule E and that would increase the profit on Schedule C which would increase the SE tax you were trying to reduce!

[WICPA]

I have a client on the other end of the transaction. She pays a monthly fee to rent the space. She tends to the booth on weekends but if she is not there and the owner of the business makes a sale of her items she then pays him a commission. We send two 1099's. One for the rent and one for commissions.

If I were the owner of the building, I would consider setting up a separate entity as a rental. I would then rent that space for my business and rent space to others. Commission sales would still go on Schedule C.

[Brian EA]

Thanks Guys
I was thinking along the line of Schedule C.