Schedule E - Rents & Royalties Main Menu
This menu includes the following:
Income or Loss from REMICS
Holders of residual interests in a REMIC are required to report their total share of the taxable income or loss of the REMIC quarterly. For every quarter, such a taxpayer ought to get Schedule Q (Form 1066) as well as instructions from the REMIC. The Schedule Q information should be entered here.
Keep Schedule Q for your records instead of attaching it to the return.
Check out Publication 938, Real Estate Mortgage Investment Conduits (REMICs) Reporting Information.
Part V - Form 4835 - Net Farm/Rental Reconciliation
Income earned from farm rental property is reported depending on whether the owner of the land was paid either based on the farm produce or on a flat rate and paid with cash. Form 4835 is used to report income from the rental property in the event that the landowner was paid depending on the farm producer. In the event that payment to the landowner is on a flat contracted rate, the income from the rental property is reported on Schedule E as ordinary rental income.
Form 4835 cannot be used if:
- You were a tenant - If you were a tenant, report Farm Income and Expenses on Schedule F
- You were a landowner (or sub-lessor) that significantly contributed to the Management of the Farm. If this is the case, report the Farm Income and Expenses on Schedule F.
- You were a landowner or sub-lessor that got paid Cash Rent for Pasture or Farmland depending on the Flat Charge - If this is the case, use Part I of Schedule E to report the income.
- Estate or Trust that has a Rental Income and Expenses from Crop and Livestock Shares. Income from such ought to be reported in Part I of Schedule E.
- Partnership or S Corporation that has a Rental Income and Expenses resulting from Crop and Livestock Shares. Such is to be reported on Form 8825.
To enter Rental Income or Loss on Form 4835:
- Go to the Main Menu of the Tax Return (Form 1040)
- From the menu, select Income Menu
- Proceed to rents, Royalties, Entities (Sch E, K-1, 4835, 8582)
- Then select Part V (Including Form 4835)
- Either select New or double click on the entry you would like to edit.
- Proceed to enter every required information
Made Payments that would Require Filing Form(s) 1099? - Report payments of fees, rents and nonemployee compensation that are $600 or made to a single payee on Form 1099-MISC. To this question, answer YES in the event that the taxpayer is needed to file file 1099-MISC for any payees. (Usually, the payee should have their copy of the 100-MISC by the 18th of February. The IRS copies on the other hand must be sent by 28th February.)
Did You or Will You File All Required Forms 1099? - You must answer this question in case you answered YES to the previous question.
IRC Section 469(c)(7)(A) Election - Answer YES if the taxpayer makes or plans to make an election to put together all rental real estate interests into one activity as per Section 469(c)(7)(A). There will be a statement alongside the return, showing this election. Check out the Revenue Procedure 2011-34.
Attach PDF Document for Rental Safe Harbor Election - In the event that a rental property is eligible for the Qualified Business Income Deduction, and the taxpayer makes the rental safe harbor election, a PDF copy of a statement communicating that fact must be attached to the return. The statement has to include:
- The address and rental category of all the rental real estate property in all the rental estate enterprises
- The address and Rental category of all rental estate property acquired or disposed of within the tax year
- Acknowledgement that the Revenue Procedure 2019-38 requirements have been met.
Check out the Revenue Procedure 2019-38 for more information on the requirements.
Other Items in this menu include:
- Rents & Royalties
- K-1 Input
- Form 8582 (Passive Activity Loss Limitation.
For more information:
Instructions for Form 8582, Passive Activity Loss Limitations
Instructions for Schedule E, Supplemental Income and Loss Instructions
Instructions for Schedule F, Profit or Loss From Farming
Instructions for Schedule J, Income Averaging for Farmers and Fishermen