Entering rental of personal property income in Lacerte

Rental income from personal property can be entered either as Schedule C income or Other income depending on if the income is business or nonbusiness in nature.

To report the income correctly, it must be determined if the taxpayer is in the business of renting personal property.

Follow these steps to enter income in the business of renting personal property:

1. Go to Screen 16, Business Income (Sch. C).
2. Scroll down to the Income section.
3. Enter income in Gross receipts or sales.
4. Scroll down to the Expenses section.
5. Enter the applicable amounts in the various expense fields.

Follow these steps to enter income for nonbusiness rental income of personal property:

1. Go to Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
2. Locate the Alimony and Other Income section.
3. Enter the total income in Income from the rental of personal property.

This amount will flow to Form 1040, Line 8 with a label of Income from Rental of Personal Property per 1040 form instructions.

Follow these steps to input expenses related to nonbusiness rental income of personal property:

1. Go to Screen 24, Adjustments to Income.
2. Scroll down to the Other Adjustments section.
3. Enter the related expenses in Expenses from the rental of personal property.

This amount will flow to Form 1040, Line 36 with a label of PPR per the instructions.

Income and expenses related to nonbusiness rental income won't be included in NOL calculations.

Per IRS Publication 17:

"If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by:

• Whether or not the rental activity is a business, and
• Whether or not the rental activity is conducted for profit.

In most cases, if your primary purpose is income or profit and you're involved in the rental activity with continuity and regularity, your rental activity is a business. See IRS Pub. 535, for details on deducting expenses for both business and not-for-profit activities.

• Reporting business income and expenses. If you are in the business of renting personal property, report your income and expenses on Schedule C.
• Reporting nonbusiness income. If you are not in the business of renting personal property, report your rental income on Form 1040, line 8.
• Reporting nonbusiness expenses. If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, Line 36. Also enter the amount and "PPR" on the dotted line next to line 36.

If you don't rent personal property for profit, your deductions are limited and you can't report a loss to offset other income…"

For more information, refer to IRS Pub. 17.