Discussion:SCH C
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Discussion Forum Index --> Advanced Tax Questions --> SCH C
Discussion Forum Index --> Tax Questions --> SCH C
| 25 February 2008 | |
I got one tax file today.Tax payer owns 4 Residential Care homes. She own all the properties. She got her taxes done by a CPA for previous years. She has different SCH C for eash of Residential care, so total 4 Sch C for same business ( residential care homes) She is showing rent paid in expense and she have SCH E for all those propeties showing rent received from Residential care home and deduction mortgage and Propety tax. She is not Depricating the properties.
I think ther should be only one SCH C and no SCH E. She will not show any rent payments on SCh C, but will deduct mortgag payments on SCH C.
Please advise,
Thanks,
| |
Donniecastleman (talk|edits) said: | 25 February 2008 |
| You could do SOME of that. You could file 1 Schedule C, do a detailed spreadsheet showing each property. Mortgage payments no, as it sounds like she's owned the properties for longer than 27.5 years so you've already deducted all of the principle and the mortgage interest is being deducted along with impounds so it would almost be a double deduction. Why did you say she's paying rent if she owns the properties.......HEY IS THIS HOMEWORK??????? Oh well, fun questions that instructors come up with. | |
| 25 February 2008 | |
| what if each RC Home is a separate LLC? I would do separate Sch Cs for that.
As far as the mortgage INTEREST - it depends on what she did with the money as to whether and where it is deductible. | |
Scottycoyote (talk|edits) said: | 25 February 2008 |
| like kevin said if she has separate llc's for each home then youd do separate sch c's i imagine, which would also make sense from a liability standpoint. One glitch i see is, it sounds like shes renting the properties from herself, which is fine as long as the homes are in llcs so they are a different entity. If these are all non-llc sch c's and its a regular sch e.........you might have a problem. | |
| February 25, 2008 | |
| More importantly, can't do a Sch. E. I don't know if LLC's would alter that, I suppose they would, actually. But if they're not LLC's, then no E. | |
| 26 February 2008 | |
| There is no LLC. She is doing all these with SCH C. Business is under her name. No LLC is involved | |
| 26 February 2008 | |
| no harm done in filing separate Sch Cs if she keeps her accounting separately | |
| 26 February 2008 | |
| did you determine how she used the borrowed money from the mortgages? | |
Scottycoyote (talk|edits) said: | 26 February 2008 |
| like jr1 said, if they arent llc's she cant rent from herself, so no schedule e and no rental deduction. Either the business or the rental property need to be a separate entity from the taxpayer | |
| 26 February 2008 | |
| she is paying mortgage from money collected from businesses. She has only one bank account for all businesses. | |
Actionbsns (talk|edits) said: | 26 February 2008 |
| Baytax, are you in the SF Bay Area? I ask because when I had my business in California, I had a bookkeeping client who had private care homes. She had three of them at that time. Is the world really that small? | |
| 26 February 2008 | |
| Bay, the question is what was the mortgage money used for? To buy herself a new car? To purchase a timeshare? To purchase one of the PC homes? To send her daughter through college?
The business can deduct the mortgage interest only if the borrowed money was used for business purposes. | |
| 26 February 2008 | |
| and as others have written, it's a SNAFU - no schedule E should be involved at all if these are sole proprietorships | |
| 26 February 2008 | |
| Kevin,she is paying mortgage on residential care homes. She own the properties. | |
| 26 February 2008 | |
| If she's deducting rent expense on the Sch C, she's reducing her income for self-employment. Reporting the rent income on Sch E just washes out the income part, but Social Security has been short changed for the self-employment tax on that portion. Mortgage interest would still be deductible on the Schedule C, as would the property taxes, so that in turn would reduce self-employment tax owed. And remember that deemed depreciation is the greater of allowed or allowable, so even if she didn't take depreciation, IRS assumes she did and her basis in the properties are reduced. | |
| 28 February 2008 | |
Hi Ruth
Thanks for your answer.Let me understand what you mean She has 3 care homes and she is having seperate SCH C for each, Using same bank account for a all care homes, same employees are working on all places. What I think or understud from you answer is that:-
NO Sch E, She can claim mortgage payments for those care homes at SCH C. She must Depericate properties on SCH C, other wise she will loose the dep.
Please let me know, if I am thinking right. Thanks, | |
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