Hope somebody has a quick answer for this. Would you file form 8825 to report income/loss from self storage units or would this be page 1 Ordinary income?
Thanks!!
makbo wrote:This topic has come up multiple times here, use the "yellow box of search" to see for yourself.
The Form 8825 instructions state,
"Do not report on Form 8825 any of the following.
• Income or deductions from a trade or business activity or a rental activity other than rental real estate. These items are reported elsewhere.""
Trade/business status and SE tax are two separate topics under the tax law.
For example: a partnership owns (or leases) and operates several commercial rental properties as its only activity. While I have used Form 8825 to report the rental in this situation, I think since it is a trade/business it should actually be reported as ordinary income, Schedule K(1065,1120S) Line 1, not Line 2.
So in short, while technically not correct to use Form 8825 when reporting income from renting real property as a trade/business, it seems like it is the form best suited for reporting it, and so far no hiccups from the IRS.
CaptCook wrote:You seem to have contradicted yourself in this post.
Guidance (nonauthoritative) for Line 1 reporting: Income...from a TorB...other than rental real estate.
makbo wrote:it seems like it is the form best suited for reporting it
makbo wrote:No, you are mis-reading the grammar and omitting a key phrase.
makbo wrote:CaptCook wrote:You seem to have contradicted yourself in this post.
Guidance (nonauthoritative) for Line 1 reporting: Income...from a TorB...other than rental real estate.
No, you are mis-reading the grammar and omitting a key phrase.
"a rental activity other than rental real estate" means rental of personal property.
makbo wrote:For example: a partnership owns (or leases) and operates several commercial rental properties as its only activity. While I have used Form 8825 to report the rental in this situation, I think since it is a trade/business it should actually be reported as ordinary income, Schedule K(1065,1120S) Line 1, not Line 2.
CaptCook wrote:I've misread nothing.
You suggested that operating several commercial properties is Line 1 income. That's absurd. It's the rental of real estate, most definitely NOT the rental of personal property. Has nothing to do with whether you consider it a trade or business in other respects.
JR1 wrote:Managing rental real estate is different from actually renting real estate....
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