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2019 Full Compliance Audit Finding on Schedule E Rental Properties

Level 1

A disallowance per IRC 280A of net rental loss on rental property with -0- rental revenue.

Property amounts were input with 224 days available for rent in "days rented" and 136 days of "personal use".

No diagnostic was made.

I removed the 224 days available for rent in "days rented" to make amount -0- but there are no changes in Lacerte income tax application revised income tax forms and original income tax return forms files; nor, a diagnostic.

Should not I have a diagnostic to check IRC 280 A for rental property losses when there is no rental revenue and zero (-0-) rental days?


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3 Comments 3
Level 15

It doesn't ask for the number of days it was "available" for rent, it asks for the days "rented".

Was this property 100% personal use then converted to 100% rental use (or vice versa)?  Or was it back-and-forth between personal use and available for rent?

Level 1

Using the original 2019 Lacerte income tax application updated through last update.

I originally entered 224 as days available for rent in "days rented", 136 personal days and -0- rent revenue.  No diagnostic for IRC 280A.

I entered -0- in days rented upon audit finding.  Still no diagnostic for 280A. 

But, more importantly there are no changes to revised forms line items on -0- days rented with personal use days entered at 136 for 1040 pp 1 and 2 and Schedule E from the original forms schedules and line items audited.

Property was originally set up in Lacerte as rental property for investment with personal use (tracked by management company) in 1031 exchange years ago.

I am trying to write this as simple as I can't so bear with me.

If a Sch E Rental Pro has -0- days rented, -0- rent revenue and $20K in expenses, should a diagnostic for IRC 280A be issued indicating the deductions should be reviewed to see if compliant with IRC 280.

I cannot generate a diagnostic in 2019 Lacerte income tax application with -0- days rented 136 days of personal use and -0- revenue.

The application computes all pages of return the same way as original (224 days rented 136 days personal use and -0- revenue) with no differences nor diagnostics.


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Level 8

I think what triggers the diagnostics is how the rental property is classified. Was it classified as a Vacation or Short Term Rental.  Only vacation rentals are subject to the 280A limitations, and merely inputting days of personal use will not trigger anything.