How to Separate My Airbnb 1099-K Income from STR Properties (Schedule C) to Mid-Long Term Rentals (Schedule E)?

[BHancock]

I have multiple properties on Airbnb. Some qualify as Schedule C, and others are Schedule E. How do I split the 1099-K income between the Schedule C and Schedule E properties if all the income is on the same 1099-K?

Do I just put a deduction of the Schedule E expense in my Schedule C "Other miscellaneous expenses" then account for it on Schedule E as cash?

[KrisD15]

No, I would not expense any from Schedule C to Schedule E, simply enter as if you received multiple 1099-K and link each one to the schedule the income belongs on if you enter as personal income, or enter a 1099-K directly on Schedule C and then a 1099-K directly on Schedule E, each with the amount allocated to that schedule. 

The IRS will look to see if you are reporting income, but they don't "match" the 1099-K to their copy. 

[BHancock]

So are you saying to put the same 1099-K info into both the schedule C and all schedule E's and adjust box 1a (gross amount) to allocate the correct amount for each?

[KrisD15]

Yes, exactly. 

[BHancock]

Understood. So, I have another question. 2 of the properties I manage is for a client and they get a "co-host payout" which is deducted from the total and sent to them directly, however Airbnb for some reason double reports this income as it is on my 1099-K and the clients 1099-K. How do I go about deducting that portion?  

They also do not deduct Airbnb's service fees from the Gross amount on the 1099-K as well. Would these deductions go into "Other miscellaneous expenses"?

[AnnetteB6]

Yes, you could enter both of those expenses as a 'miscellaneous' expense where you can enter your own description and amount for the expense.

@BHancock 

[BHancock]

Thanks so much Annette for clarifying all this for me!

One last question that I can think of right now. In the event the prior year's filing (2023) I had a property that qualified as a Schedule C, but in 2024 it is now considered a Schedule E. Is there correct way to do this to go into "Schedule C > Assets" and manually select the property and any other assets that are connected to that property and currently depreciating (furniture, home improvements, etc.) and then report them as taken out of service in 2024 and account for the "prior depreciation" amount when reentering them in as a Schedule E asset?

[AnnetteB6]

Since the property itself and its other associated assets are still being used, but being reported on another form, they should not be taken out of service on the Schedule C.  

Instead, duplicate the entries for each asset on the Schedule E so that the current depreciation will continue as it has in the past and then delete the entry from the Schedule C.  This will take some effort because there is not a simple way to copy it from one form to another.

@BHancock 

[AmeliesUncle]

Back up a bit.  Short Term Rentals don't necessarily mean Schedule C.

Are "services", such as maid service or meals (or maybe transportation or concierge services), provided to the tenants?  That is what determines Schedule C versus Schedule E.

[BHancock]

"Are "services", such as maid service or meals (or maybe transportation or concierge services), provided to the tenants?  That is what determines Schedule C versus Schedule E." 

You are correct, that is #2 of the exceptions, however mine was Exception #1 for 2023, but in 2024 that is no longer the case for 1 of my properties... 

According to: https://www.irs.gov/publications/p925

Under section "Rental Activities"

"Exceptions. Your activity isn’t a rental activity if any of the following apply.
1. The average period of customer use of the property is 7 days or less."

This statement was true for me in 2023 as my customers stayed an average of 5 days, so I reported this property as Schedule C and as a non-residential property for depreciation since its technically a hotel and not a residential rental property... it was a commercial property.

[BHancock]

"This will take some effort because there is not a simple way to copy it from one form to another."

Agreed, wish there was an easier way to move assets and their attached assets over, but manual entry it is. Thanks for all your help and information. Going to be a busy couple of weeks ahead. I am sure I will have additional questions along the way.

[AmeliesUncle]

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@BHancock wrote:

According to: https://www.irs.gov/publications/p925

Under section "Rental Activities"

"Exceptions. Your activity isn’t a rental activity if any of the following apply.
1. The average period of customer use of the property is 7 days or less."

---

That is for purposes of the Passive rules, NOT for other purposes, such as Self Employment Tax (which is what Schedule E versus Schedule C is based on).

If "services" are not provided to the tenants, it belongs on Schedule E, not Schedule C.

[BHancock]

"That is for purposes of the Passive rules, NOT for other purposes, such as Self Employment Tax (which is what Schedule E versus Schedule C is based on).

If "services" are not provided to the tenants, it belongs on Schedule E, not Schedule C."

Feel free to debate the Tax Expert in the Attachment.

[AmeliesUncle]

There is nothing to debate, unless that person wants to argue against the law and the IRS guidance.

https://www.irs.gov/pub/irs-wd/202151005.pdf

[BHancock]

Honestly this has nothing to do with the topic, why the hell would you come in here and debate me on this? Your link doesn't work, and you are not providing any cited information to the contrary. This was settled 2 years ago. A short-term rental with 7 days average stay or less is considered a Schedule C according to the IRS and several CPA websites, etc. I am no longer 7 days average and without extra services offered I am now considered Schedule E for that property.