Discussion:Property mangement revenue?
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Discussion Forum Index --> Tax Questions --> Property mangement revenue?
TAXi driver (talk|edits) said: | 4 February 2008 |
| I'm a newb preparer, hoping to start my CPA in the next year. I have a question that I'm having trouble answering.
There's a property management company (S CORP) made up of 2 realtors. They own no property. They collect rent for the owners, arrange repairs, and keep a 10% fee. What are their gross receipts? I believe it is the rent they are collecting; however, the partner redid the return so that revenue is just the 10% fee collected. Can someone point me to what I'm missing? In the end, it's the same result, but I want to know why. | |
RoyDaleOne (talk|edits) said: | 4 February 2008 |
| Maybe they are an agent of the true owners the principal and are acting as fidiuaries. | |
RoyDaleOne (talk|edits) said: | 4 February 2008 |
| That is to say who's income was the rents?
It is the owners not the agents. | |
Victor1530 (talk|edits) said: | 4 February 2008 |
| Taxi Is this for a local gross receipts form for county or city? Or for the federal return? If for the local tax, try and read the regs a little closer...the county i was in TN it was the Mgt fees and other income of the mgt co ...not the gross rent. | |
Death&Taxes (talk|edits) said: | 4 February 2008 |
| Forgive me if I get this wrong, for my idea of a balance sheet is an excel spreadsheet, but on that balance sheet the money due the owners would be a liability. As the money came in, I would credit it to this account, charge the expenses and the management fee to this account, and therefore on the P & L only show the management fee, less any expenses not attributable to the owners. | |
| 4 February 2008 | |
| I would do as D&T suggests. That way all of the proceeds are accounted for on the BS and P&L. | |
Victor1530 (talk|edits) said: | 4 February 2008 |
| The S-Corp does not own the rents, and is a acting in a fudiciary capacity. It is an increase in cash and a liability to the owners until remitted. It does not hit any income account or expense account in the P & L of the S corp. The only income the S Corp has is the mgt fees, markups on any repairs made or any other contractal agreements between the owners and the mgt company. It will always be on the balance sheet in the form of cash. If the management company is using a master bank account, and the software will keep each owners bank account funds separate in the software, then according to the Tenant Landlord act in TN you have fulfilled your duty as fudiciary.Check with the Real Estate board in your state.......some states do not allow co-mingling of funds in the above manner. TN does and can use one master bank account and have the software keep the funds separate. | |
