If it's a family member who is paying below-FMV rent -- and it usually is -- then the client should consider swapping Schedule E for Form 709.  However, I see many cases where tenants become the favorite charity of landlords, who are otherwise parsimonious about giving money to anyone, whether charity or family.  "They keep the property up, they don't cause any problems"  -- well, isn't that what tenants are supposed to do?  But it's like the surveys that show tax preparers who have been in business for 20 years charge less than those who just started, because they don't want to raise fees for their friends. 

On the other hand, some discount can be allowed for worthy tenants, whether related or not.  I had a client who rented to his parents for 20 years, at less than what many would consider fair rental value.  But the house doubled and tripled in value during that time, and he didn't have to worry about turnover.  Remember the adage about pigs getting fat while hogs get slaughtered.