Rental Storage Units

[erchess]

answers

Providing security could be a service. But If the contract does not include a provision for full time security it seems that it is a rental issue.

What is the reason for her presents, just to sign up new renters?

Who provides the lock? Does the owner or renter open and close the rental boxes?

I'm looking for any type of services and are they material in order to use the boxes.

Reason for presence is to sign up new renters and take payments from existing renters.

The Renter provides the lock and opens and closes the boxes except that if someone goes long enough without paying rent the owner cuts off their lock and puts on her own and eventually opens the unit and takes possession of the stuff.

[erchess]

Let me throw in another wrinkle

The same taxpayer also owns a mobile home park. Every square inch of the park except the road is associated with exactly one trailer. Tenants do their own lawn mowing. OWhwner does the mowing, the road maintenance, all repairs, and pressure washes the exteriors of the trailers once a year.

When I inherited the taxpayer all activities were being reported together on Schedule C but on a hand done return without (If I remember correctly) Self Employment Tax on the profit. I changed it all to Sch E. There were really no records of what payments and expenses were for what activity and the larger ones such as the pressure washer were applicable to both.

I am convinced that this taxpayer is telling me about all his income and actually had all the expenses he claims but even he does not know how to separate the two activities.

[BOB W]

The same taxpayer also owns a mobile home park. Every square inch of the park except the road is associated with exactly one trailer. Tenants do their own lawn mowing. OWhwner does the mowing, the road maintenance, all repairs, and pressure washes the exteriors of the trailers once a year.

When I inherited the taxpayer all activities were being reported together on Schedule C but on a hand done return without (If I remember correctly) Self Employment Tax on the profit. I changed it all to Sch E. There were really no records of what payments and expenses were for what activity and the larger ones such as the pressure washer were applicable to both.

I am convinced that this taxpayer is telling me about all his income and actually had all the expenses he claims but even he does not know how to separate the two activities.

It seems to me that going with Schedule E is the correct way to file. Not enough personal services to the renters.


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Just as an added note::::: Real property rentals can end up on Schedule C... Like a B&B or any rental that is less than 30 days on a regular basis..Hotels, Motels and short term residential vacation rentals whether services are provided or not.................

[veritas]

Regs. Sec. 1.1402(a)-4. Rentals from real estate

(2) SERVICES RENDERED FOR OCCUPANTS. Payments for the use or
occupancy of rooms or other space where services are also rendered to
the occupant, such as for the use or occupancy of rooms or other
quarters in hotels, boarding houses, or apartment houses furnishing
hotel services, or in tourist camps or tourist homes, or payments for
the use or occupancy of space in parking lots, warehouses, or storage
garages, do not constitute rentals from real estate; consequently,
such payments are included in determining net earnings from self-
employment. Generally, services are considered rendered to the
occupant if they are primarily for his convenience and are other than
those usually or customarily rendered in connection with the rental
of rooms or other space for occupancy only. The supplying of maid
service, for example, constitutes such service; whereas the
furnishing of heat and light, the cleaning of public entrances,
exits, stairways and lobbies, the collection of trash, and so forth,
are not considered as services rendered to the occupant.

In Kleinrock's analysis storage garages are generally included in self employment income.



In the IRS Market Segment Papers dealing with passive activities, I found the following:

MINI STORAGE UNITS

* HARRIS, T.C. Memo 1998-332 a Mini-storage units are rentals; thus
losses are limited under IRC section 469.


Hopper v. Commissioner, 94 T.C. 542 The taxpayer netted his losses from mini storage units with his self employment income from a law practice. Taxpayer lost.

[Black Bart]

Agree with your view.

...It would seem to me that the storage units count as real property.

And the services, per Veritas' posted regs, are not (99%, anyway) provided for the convenience of the customer, but are those usually done by anyone taking normal care of his/her business and doing routine maintenance.

I had a 25 unit mini-storage client -- we put his on Schedule E for about ten years with no problems.

[ChEAr$]

thank you

(2) SERVICES RENDERED FOR OCCUPANTS. Payments for the use or
occupancy of rooms or other space where services are also rendered to
the occupant, such as for the use or occupancy of rooms or other
quarters in hotels, boarding houses, or apartment houses furnishing
hotel services, or in tourist camps or tourist homes, or payments for
the use or occupancy of space in parking lots, warehouses, or storage
garages, do not constitute rentals from real estate; consequently,
such payments are included in determining net earnings from self-
employment. Generally, services are considered rendered to the
occupant if they are primarily for his convenience and are other than
those usually or customarily rendered in connection with the rental
of rooms or other space for occupancy only. The supplying of maid
service, for example, constitutes such service; whereas the
furnishing of heat and light, the cleaning of public entrances,
exits, stairways and lobbies, the collection of trash, and so forth,
are not considered as services rendered to the occupant.

(snipped....)
I

I knew I didn't just make that up.

I used to have a favorite quote: "In vino veritas".
But now it is: In veritas veritas."

[Black Bart]

Harlan

I knew I didn't just make that up.

I used to have a favorite quote: "In vino veritas".
But now it is: In veritas veritas."

I'm like Bob -- do you mean C or E?

[erchess]

Note

(2) SERVICES RENDERED FOR OCCUPANTS. Payments for the use or
occupancy of rooms or other space where services are also rendered to
the occupant, such as for the use or occupancy of rooms or other
quarters in hotels, boarding houses, or apartment houses furnishing
hotel services, or in tourist camps or tourist homes, or payments for
the use or occupancy of space in parking lots, warehouses, or storage
garages, do not constitute rentals from real estate; consequently,
such payments are included in determining net earnings from self-
employment. Generally, services are considered rendered to the
occupant if they are primarily for his convenience and are other than
those usually or customarily rendered in connection with the rental
of rooms or other space for occupancy only. The supplying of maid
service, for example, constitutes such service; whereas the
furnishing of heat and light, the cleaning of public entrances,
exits, stairways and lobbies, the collection of trash, and so forth,
are not considered as services rendered to the occupant.

In Kleinrock's analysis storage garages are generally included in self employment income.



In the IRS Market Segment Papers dealing with passive activities, I found the following:

MINI STORAGE UNITS

* HARRIS, T.C. Memo 1998-332 a Mini-storage units are rentals; thus
losses are limited under IRC section 469.


Hopper v. Commissioner, 94 T.C. 542 The taxpayer netted his losses from mini storage units with his self employment income from a law practice. Taxpayer lost.

that there is no conflict between the quote from Kleinrock and the court cases cited. A mini storage unit is not at all the same thing as a storage garage because the former is for misc stuff and the latter is for motor vehicles.

[ChEAr$]

Still

I'm like Bob -- do you mean C or E?

schedule c, as I mentioned in first response above.