I need a place to enter the avg rental period of my rental property. If <7 days, it gets reported as a business instead of rental, which means it's not passive income.

[Anonymous_]

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@AmeliesUncle wrote:

As of now, I'm remaining neutral on whether the 7-day-or-less being non-passive or not (assuming Material Participation). 

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Understood, completely, but I think the issue mentioned later in this thread is whether the rental is reported on Schedule C or E. Again, I think that is what @gmyoung is alluding to with respect to the reporting issue.

[AmeliesUncle]

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@Anonymous_ wrote:

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Understood, completely, but I think the issue mentioned later in this thread is whether the rental is reported on Schedule C or E. Again, I think that is what @gmyoung is alluding to with respect to the reporting issue.

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Ah, okay, I misunderstood that.

I completely agree with Tagteam that it is NOT subject to Self Employment taxes.  Even if it isn't considered a "rental" for purposes of passive losses, that has nothing to do with the fact it *IS* a rental for other purposes including for self-employment tax purposes (rentals are not subject to self employment tax).

Schedule C will impose self employment tax on any profits, so that is not appropriate because it is still a rental for purposes other than passive losses.  So it belongs on Schedule E, even if it isn't considered a "rental" for purpose of Passive Losses.

When reporting it on Schedule E, *IF* you feel the less-than-7-day thing makes it non-passive, then you should (1) use the CD/downloaded version of TurboTax, (2) enter the "Forms Mode" and (3) on the "Schedule E Worksheet" check the "Other Passive Exceptions" box.

[seemasb]

I have turbo tax home edition year 2022  downloaded from link am looking for one hour can find in the +Schedule E Worksheet"   "Other Passive Exceptions" box. to check 

[Mike9241]

if you provide significant services it goes on schedule C so the question becomes moot in this case. if not it's schedule E. there is no such box to indicate it's rented <7 days.  Worse in my version (deluxe) it never asks the question about being short-term rental. the only way to get it treated as non-passive is to switch to forms mode and check the box "other passive exceptions"  Box G in my version. 

[Scorkett]

Sorry to bring this back up again. 

I wanted to ask what everyone decided on whether the < 7 days + material participation meant trade / business activity (non passive) or rental (passive)?

My understanding was that the <7 days + material participation meant it was a trade/ business and would qualify for losses to offset against other non passive income (IE W2 wages).  

[Anonymous_]

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@Scorkett wrote:

I wanted to ask what everyone decided on whether the < 7 days + material participation meant trade / business activity (non passive) or rental (passive)?

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Review the posts above, particularly by @Mike9241 and @AmeliesUncle.

There really is no consensus on the issue. 

[AmeliesUncle]

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@Scorkett wrote:

I wanted to ask what everyone decided on whether the < 7 days + material participation meant trade / business activity (non passive) or rental (passive)?

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It is non-passive.

However, that doesn't necessarily mean it is a "trade or business".  It very well could be, but the average length of stay and Material Participation don't automatically trigger it to be a "trade or business".

[Anonymous_]

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@AmeliesUncle wrote:
It is non-passive.

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So, in sum, If the activity falls within Section 1.469-1T(e)(3)(ii)(A and the taxpayer's involvement in the activity rises to one of the levels set forth in Section 1.469-5T(a), any loss is nonpassive?

[Scorkett]

Thank you that makes sense. The  instructions for form 8582 really lay everything out well :

Trade or Business Activities A trade or business activity is an activity (other than a rental activity or an activity treated as incidental to an activity of holding property for investment) that:

1. Involves the conduct of a trade or business (within the meaning of section 162),

2. Is conducted in anticipation of starting a trade or business, or

3. Involves research or experimental expenditures deductible under section 174.