Church meetings....donated time...rent for building

[Denne]

My client is not a pastor....formally anyway. He built a church for meetings and has been holding services off and on in that church. He has donated all of his time and the group paid a "rental" fee for the building (church) over the past years. My client never accepted any pay for his time and any supplies etc. The client has been claiming the rental income. The group is now no longer meeting. There were donations....just like any other church for various things the church has been doing go help others over the years. Since there were funds left, the group donated the funds back to my client for his time and efforts. The other idea behind that was for the client to keep maintaining the church he built and a reversal of his "giving" as well. Should this be considered income for services or rental in your opinion. Any other options come to mind??

Thanks..............

[OldJack]

Since it was not specific as to what he was being paid for, my first thought is that it is rental income the same as he has been reporting.

[MAMalody]

I think you have some real issues here. I interpret your posting to say that he did not actually receive any rent, he just repoted rent as income and then deducted the appropriate expenses. I would shy away from the type of tax return or prepare the year in questions as it should be. In my opinion, if he did not actually receive rent, the rental expenses could be listed as contributions but not as rental expenses because no rental actually existed. It is also questionable whether those monies he received in 2009 were rental expenses or simply reimbursements to help defray costs as a matter appreciation - but that is no issued concerned to the other question. If I have misread this, then I am all wet and please throw me a towel.

[kcjenkins]

As I read it, they did pay him rent. At least that is what it said in the first post. And now they have paid him one last time. I'd show it as rent, then how I'd handle it going forward would depend on his plans. Is he going to rent it to someone else? Convert it to personal use? Sell it? If he's going to continue renting it, no need to do anything but show the rent. If he's converting it to personal use, you want to use the 'disposal' tab to show that, so that it does not show up next year. If he's going to sell it, I'd keep it on the asset schedule until it is sold.

I'm not going to touch the issue of this 'unofficial church' and what kind of bookkeeping they did. As long as your client did not control the money, as seems to be the case, it's not his problem. Unless it's his family members that controlled it, that is.