@AmeliesUncle wrote:
It does not say to report on Schedule C.
The "rental activity" is ONLY pertaining for determining if it is Passive or not. For the Passive Loss rules, a "rental activity" is automatically passive, versus a non-rental activity may or may not be passive. It is still a rental for all other purposes, and the rental still goes on Schedule E.
You understand that and I understand that (and we are in agreement here), but it is mixed messaging (at best).
The designation of "not a rental activity" leads a lot of professionals, analysts (and a plethora of lookers on) to conclude that the designation entails reporting on Schedule C (as a business) rather than Schedule E.
These various people support their proposition by pointing to Schedule E itself, which states "....income and loss from rental real estate...." at the top of the form. Thus, (they believe) that activities that are not rental activities must, necessarily, be reported on Schedule C (clearly wrong, but......).
Publication 925 should make it clear that the designation is strictly for the purposes of determining whether or not the income is passive and not whether the income should be reported on a schedule other than Schedule E.
