- quote -

Because his wages as a professor have never been subject to
SS tax or Medicare.

He had STRS and there's a ruling that says retired teachers,
who have been paying into a state plan and were not required
to pay SS and then go back to work for their old employer,
are STILL not required to pay SS. In fact, some teachers who
TRIED to call their "golden handshake" type payments
self-employment income (so they could qualify for Medicare)
have been turned down by SS. To their distress.

Nan, EA in LA

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Nan Eklund wrote:

- quote -

And of course you later discovered it should have been on a
W-2, right?

- quote -

If that was to "fill in while.....", meaning he earned the
money, why wasn't it subject to se tax? (Or at least his
half of social security?)

- quote -

I know, also had a little old lady who got one probably from
same insurance company located in San Franciso for roof
repairs.

Cheer$,
Harlan Lunsford, EA in LA

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Some entities send 1099 MISC for income without thinking. I
have several school districts in mind! One sends a 1099
MISC for Medicare reimbursement payments to retired
professors.

I just finished a long argument with IRS about a $19,000
1099 to a professor who retired and stayed on at the college
to fill in while a replacement was being located.

Thanks to an Appeals Officer in San Francisco, I have, on
file, the Code Sec that says he didn't have to pay SE tax on
the income.

And once upon a time, the local gas company sent a 1099 for
a price reduction to a little old lady who got a new
furnace.

That one was FUN.

Nan, EA in LA

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- quote -

AFAIK they are not available for free online. The original
poster appeared to be a tax pro so I assumed they would have
access to the cases.

The cases seem a little long to post here in the format
provided. However for TC cases they aren't really that
long.

Drew Edmundson, CPA (NC)
e-mail is my first name at nccpa dot com

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- quote -

If I have, it's not been lately! lol

Anyway, back when the idea was popular and many were doing
it, the payors of tool rentals (mainly to mechanics and
other such workers) were listing it on 1099-A as rentals
instead of in box 7. IRS uncovered the plot, went on a
tear, and issued CP-2000 notices reclassifying the income as
schedule c income and making se tax adjustments accordingly.

Cheer$,
Harlan Lunsford, EA in LA

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- quote -

Try www.ustaxcourt.gov

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Harlan Lunsford wrote:
- quote -

How should I know? I would assume that the 1099s have
the income reported in box 7 "non-employee compensation"
rather than box 1 "rents". See the specific instructions
for box 1 of the 1099MISC.

It's not binding, but the 1040 miscellaneous income
instructions and schedule C instructions make it clear
that income from rental of personal property goes
on the miscellaneous income line and NOT on schedule C.

I haven't checked the code or regulations. Have you?

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Drew Edmundson <cfdaqw[at]nccpa.com> wrote in

- quote -

Are these decisions available on-line? If so, where?

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We once had a storage client that leased all of his storage
units to his manager in a "master lease". The manager
was then able to "sub-lease" the rest of the units to
whomever he wanted.

We reached the conclusion that this belonged on a
schedule E.

Charles Markham, EA

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Dick Adams wrote:
- quote -

Okay, okay. I've now read the HOpper case and see the logic.

And also must admit I've never had any individual(s) clients
in the business; only a corporation, in which case a moot
point.

What's interesting about that Hopper case though, is that
the protagonist was a lawyer who indeed wished for the
profits to be subject to SE tax, so he could net out that
50,000$ loss with his law practice 50,000$ profit! And he
lost. Wonder what would have been his argument if he'd had
profit on both?

C$,
HL

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Brian DSouza wrote:
- quote -

Hey! I've got somebody on my side now. Thanks, Brian.

The barber/beautician's chair, when rented from the shop, is
subject to 1099-misc reporting to the shop owner, too.

I do have such a client, a lady who owns the shop and has
several booth rentals. She also provides substantial
services to her booth renters, taking money for them and
making appointments.

C$,
HL, EA in LA

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Arthur L. Rubin wrote:
- quote -

Then why did IRS get a hair on it's.. up it's... whatever,
and go after all those mechanics who were receiving 1099'misc
for "tool rentals" from their employers, and make them fill
out schedule C and Sch SE's?

C$,
HL

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"Harlan Lunsford" <hlunsfordns[at]bellsouth.net> wrote:
- quote -

The central appraisal district considers them as
improvements to real estate. The taxing entities tax them
as real, not personal, property. One of the clients has
been through an audit; the fact that they were reported on
Schedule E and not Schedule C was not questioned. I've left
it on Schedule E ever since.

Joel Berry, CPA
Sugar Land, Texas

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Harlan Lunsford wrote:

- quote -

Rentals of personal property (without substantial
associated services) are reported as miscellaneous
income, with deductions going on the miscellaneous
adjustments to income. Still no schedule C.

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Dick Adams wrote:
- quote -

Well, they DO maintain the grounds -- but I can't think
of any "substantial" services they provide.

(Using the common definition of "substantial", not
referring to law, regulations, or IRS publications.)

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Dick Adams wrote:
- quote -

What I base my answer on is that self storage units are, at
least down this way from what I've heard, classified as
personal property. And since rentals from personal property
go on schedule C, ergo, profits to Schedule SE.

Come to think of it,I never did check this fact with tax
appraiser's office either here or across the river in
Georgia. Which means then, that IF real estate, those
storage units have to be depreciated over 41 years instead
of just 15 years, eh?

Cheer$,
HL

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"Dave Woods, EA" <d.woods[at]verizon.net> wrote:
- quote -

The storage facility as a whole is real estate, just like a
hotel is real estate. But the storage *unit* is not, just
like a hotel room is not real estate. To take this to it's
logical extreme, the barber's chair is not real estate.

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"Harlan Lunsford" <hlunsfordns[at]bellsouth.net> wrote:
- quote -

Why would storage units not be real estate? Would it be
different than renting any other commercial real estate?

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.

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Joel Berry, CPA wrote:
- quote -

Question, Joel. Are those storage units real property under
Texas law? Or personal property? That could make a
difference you know.

But then, you're "deep in the heart ... of Taxes."

Cheer$,
HL, EA in LA

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rodneydl[at]excite.com wrote:

- quote -

Look at Hopper v. Commr., 94 TC 542 and Bobo v. Commr. 70
TC 706.

Drew Edmundson, CPA (NC)
e-mail is my first name at nccpa dot com

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