Rental of back yard

[Max W]

Client occasionally rents out his backyard for small groups, weddings, parties, etc.

He provides no services, nor helps in any way with activities and has no expenses involved.

The question - Is it Sch C, or Sch E.   I am inclined to just put it down as other income. 

What opine you all?

 

[Lee B]

There was similar thread awhile back with the same question, was it yours, Max?

 

[grandmabee]

It is not a C.  You can put on E but land no depreciation so misc. income would work.  QBI might come into play if on E.  Also check on renting less than 14 days not taxable.  Guess I am not much help just some ideas to look up.

 

[ILLMAS]

Deja vu - I would be more worried about them having the proper insurance, do you know how drunk people get in weddings, especially today 

[jklcpa]

Is it this one from last year?  How did you handle it then?
 

 

[jklcpa]

1 hour ago, grandmabee said:

renting less than 14 days not taxable

That rule is a special provision of 280A that defines rental of a residence, so with this being rental of only the yard, I'm not sure that would be applicable with the facts presented.

There's definitely a profit motive, so I'd say that it is reportable.

Max W, does this client advertise this in any way, and if it is the same client as last year, how aggressive is he with this?  Could it be construed as a business at this point?  Is there any access to the home or other facilities at all?  How does one host a party of any duration without having bathroom available?  Anything else available to the guests such as a pool, gazebo, or any other structures or improvements to the property?

 

[Max W]

It is the same client.  Except that last year, the income was only $1500 and it went on Sch E.

I am not questioning it as to it being taxable, but as to where to report it.  

There are a couple of small structures that were there for the tenants a gazebo and a toilet.

He does not advertise.  It started when one of the tenants wanted to use the back yard for a party and it just spread by word of mouth.

 

 

 

 

[jklcpa]

13 minutes ago, Max W said:

It is the same client.  Except that last year, the income was only $1500 and it went on Sch E.

I am not questioning it as to it being taxable, but as to where to report it.  

There are a couple of small structures that were there for the tenants a gazebo and a toilet.

 

I would put it on Sch E again. Unless it is more than a nominal amount of land basis to allocate, I probably wouldn't worry about that. 

I knew you weren't questioning it being taxable. That part of my reply was to grandmabee's "14-day" statement.

As someone pointed out last year, your client may lack adequate insurance coverage for people using the property as other than personal guests.

[Max W]

1 minute ago, jklcpa said:

I would put it on Sch E again. Unless it is more than a nominal amount of land basis to allocate, I probably wouldn't worry about that. 

I knew you weren't questioning it being taxable. That part of my reply was to grandmabee's "14-day" statement.

As someone pointed out last year, your client may lack adequate insurance coverage for people using the property as other than personal guests.

From somewhere I recall that if structures on land, such as a fence, are less than 10% of the value of the land, they can be expensed.

This property is in SF and the land for this $1 MM property is 70% of the basis.

[Lee B]

Granted the income is less ,but the way you have phrased the circumstances makes the question sound different?