@pk wrote:
(d) Given the above, my position is that you should consider this as rental income reportable on schedule-E and if the rental is NOT FMV for the area and type, then recognize the difference as gift ( probably under the free limit for the year ) to the relative.
In my opinion, in order to view it that way, the owner would need to report the full FMV rents as income on Schedule E. If they aren't reporting the full FMV (and only reporting what was actually paid), it is still being rented below FMV (and deductions are lost).
