Schedule E is used for reporting supplementary income, meaning it is not actively earned but it is not investment income. Supplementary income can come from several different sources, the most common sources being income from rental real estate, royalty income, and income from trusts, estates, partnerships, and S corporations. This course will focus primarily on income from rental real estate.
Rental real estate can be a significant source of income and deductions for many taxpayers. However, rental real estate requires careful planning to avoid several pitfalls. Tax practitioners should also be aware that the internet is rife with incorrect and outdated information and taxpayers can sometimes have unrealistic expectations about what they can deduct or what income they do or do not need to report.
After completing this course, you will be able to:
- State the purpose and elements of Schedule E
- Identify the types rental income and the related deductions
- Explain which income must be reported, and
- Know how to report the losses and deductions that are allowed for different types of income.