If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is generally determined by:
- Whether or not the rental activity is a business, and
- Whether or not the rental activity is conducted for profit.
Generally, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental
activity is a business. See Publication 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 or C-EZ (Form 1040). The form
instructions have information on how to complete them.
Reporting nonbusiness income.
If you are not in the business of renting personal property, report your rental income on line 21 of Form 1040. List the type and amount of the
income on the dotted line to the left of the amount you report on line 21.
Reporting nonbusiness expenses.
If you rent personal property for profit, include your rental expenses in the total amount you enter on line 32 of Form 1040. Also enter the amount
and "PPR" on the dotted line to the left of line 32.
If you do not rent personal property for a profit, your deductions are limited and you cannot report a loss to offset other income. See
Activity not for profit, under Other Income, later.
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