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I believe that even if I thought @RitaB was not correct I would not point it out to her. I saw all the flowers from the fertile ground in her back 40 for myself. But I really think she is correct as well. Tom Modesto, CA

I believe that Rita is correct.

I believe if the rent charged is a flat rate regardless of sales by the tenant, Sch E is correct. Use Form 4835 if the landowner's rent depends on production by the tenant. See p. 2: https://www.irs.gov/pub/irs-pdf/f4835.pdf

JKL...that's what I'm trying to determine. Not sure why she feels the "surrogate" impacts the taxability of the earnings. I asked her for additional info. I don't think that will make a difference but I would like to know more about the situation.

Ok, parent is a guardian for these funds of the minor child. The child is the legal owner of the assets with guardian having a fiduciary responsibility. Taxable earnings would be the child's. Why does the parent think the earnings wouldn't be, or wouldn't be taxable? Good info here on different types of accounts: https://info.legalzoom.com/difference-between-guardian-account-custodial-account-23481.html

I've never heard the term either and found only the one answer shown below from within a Yahoo Q&A when searching for that term related to bank accounts. From that, I'd report the income as belonging to the person whose SSN is on the 1099.

I've never heard of a surrogate account. Whose SSN is on the 1099?

Well, he's never intended to use it as a residence, and if he sells it at a loss, the loss would be nondeductible.

What? You say the auditor is requiring your client to prove that the people he paid cash to reported it on their returns? Did your client file 1099's on these folks? Were they complete? The Auditor can ask you for the moon. It is not you or your clients' responsibility to find out if they reported that income or not. Tell the agent to follow up back at the office and to track down the other vendors Rich

haha, you know that's not true! You and some other exceptional members have corrected me when I'm wr...wr...wr... wrong (there I said it ), and I may not say it openly , but I do appreciate that you make sure the topic is explored fully and that we all end up with the correct answer. Don't I at least give those corrective posts a like? Believe it or not, I am still human and make mistakes.

I'm going to enjoy this for a minute because it may never happen again!

Purchased Drake for 2018 and they gave me all the prior years (from 2002-2017) unlimited. Everything is in their download center, so I just download the previous years when I need to use them. They also have the converter program going back to 2008 (so I can convert 2007 tax year data if I have to).

Dr Abby, the chiropractor... straightening me out.

You're welcome. I was lucky enough to have spent my early years in a small CPA firm having a diverse client base where I worked on a wide variety of projects. The owner was a perfectionist when it came to the work product, and he gave me the guidance and leeway to learn. He's gone now and I miss him, but his training and expectations still resonate. And... Google.