Entering income from rental of personal property in ProConnect

This article will assist you with entering income from rental of personal property in Intuit ProConnect.

Rental income from personal property is entered either as Schedule C income or Other income depending on whether the income is business or nonbusiness in nature.

To determine how to report income from renting out personal property, such as equipment or vehicles, consider:

• Whether or not the rental activity is a business, and
• Whether or not the rental activity is conducted for profit.

Usually, if the rental's primary purpose is income or profit and the taxpayer is involved in the rental activity with continuity and regularity, the rental activity is a business.

• See IRS Pub. 17 for more information.
• See IRS Pub. 535 for details on deducting expenses for both business and not-for-profit activities.

To enter income from business rental of personal property:

If the taxpayer is in the business of renting personal property, report income and expenses on Schedule C.

1. From the left of the screen, select Income and choose Business Income (Sch C).
2. Select Income Statement from the dropdown menu in the upper-right corner of the input screen.
3. Enter income in Gross receipts or sales.
4. Scroll down to the Expenses section.
5. Enter the applicable amounts in the various expense fields.

To enter income from nonbusiness rental of personal property:

If the taxpayer isn't in the business of renting personal property, report rental income on Schedule 1 (Form 1040), Line 8.

1. From the left of the screen, select Income and choose SS Benefits, Alimony, Misc. Income.
2. Scroll down to the Alimony and Other Income section.
3. Enter the total income in Income from the rental of personal property.
   • This amount will flow to Schedule 1 (Form 1040), Line 8 with a label of Income from Rental of Personal Property, per 1040 form instructions.

To enter expenses from nonbusiness rental of personal property:

• If personal property is rented for profit, include rental expenses as part of adjustments to income.
  • Income and expenses related to nonbusiness rental income won't be included in Net Operating Loss (NOL) calculations.
• If personal property isn't rented for profit, deductions are limited and you can't report a loss to offset other income.

1. From the left of the screen, select Deductions and choose Adjustments to Income.
2. Select Less Common Scenarios from the dropdown menu in the upper-right corner of the input screen.
3. Scroll down to the Other Adjustments section.
4. Enter related expenses in Expenses from the rental of personal property.
   • This amount will flow to Schedule 1 (Form 1040), Line 22 with a label of PPR on the attached Statement 1.

Per IRS Publication 17:

"If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by:

• Whether or not the rental activity is a business, and
• Whether or not the rental activity is conducted for profit.

In most cases, if your primary purpose is income or profit and you're involved in the rental activity with continuity and regularity, your rental activity is a business. See IRS Pub. 535, for details on deducting expenses for both business and not-for-profit activities.

• Reporting business income and expenses. If you are in the business of renting personal property, report your income and expenses on Schedule C.
• Reporting nonbusiness income. If you are not in the business of renting personal property, report your rental income on Form 1040, line 8.
• Reporting nonbusiness expenses. If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, Line 36. Also enter the amount and "PPR" on the dotted line next to line 36.

If you don't rent personal property for profit, your deductions are limited and you can't report a loss to offset other income…"

For more information, refer to IRS Pub. 17.