Hair stylist/barbers

[skhyatt]

This topic came up on another board with many, many replies. How would you treat the income a self employed Hair Stylist receives from the rental of booth space? As part of their Sch C income/receipts or would you try to report it elsewhere on the return? I personally think it should go on Sch C. Thoughts?

[sea-tax]

I am going with Sch c because they are usually renting equipment like dryers, chair , sink table and etc.. However I could also see sch e but I don't think that is right.

[geekgirldany]

I might could see a Schedule E. But ususally they are renting the space themselves. In this case I think a schedule C would be in order. The rent they receive is not on passive investment property.They could own the building though which may lean towards a Schedule E.

[TaxBird]

Schedule C

According to IRS Pub 3518 Beauty Industry Guidelines, booth renters report on Schedule C.

[Brad Imsdahl]

When you are in the business of Hair Stylist and you have an extra chair to rent to other Hair Stylists, you are renting equipment, not real estate. What is the more important thing being rented? The floor space, or the chair and sink? Take away the chair and sink and could you still get the same fee for the rental of floor space?

Obviously not. In this type of business, the only way you could call it real estate rental is if you make the other Hair Stylist bring in his or her own chair.

Equipment rentals cannot go on Schedule E. The instructions for Schedule E specifically tell you to put equipment rental either on Schedule C as a trade or business, or on line 21 of the 1040 with related expenses on 36 of the 1040, code "PPR."

Line 21 of the 1040 is only used when the taxpayer is not in the trade or business of renting the equipment.

Obviously when the taxpayer is already in a trade or business and the rental is a supplement to that trade or business income, you cannot make the claim the chair rental is not a trade or business. So your only option is Schedule C.

[wv112]

A client was audited last year and we had the income on sch c and the return was accepted as filed.