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

Which apartment? (Existing tenant or new tenant?)

Why would it be a reduction in rent (home office expense)
for the office part, but not a reduction in rent (personal
living expense) for the other part?

- quote -

The "business purpose" would be to entice the new tenant to
move in there rather than a different building.

Seth

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Seth Breidbart wrote:

- quote -

I grin every time I hear about the practice of "referral
fees". Reminds me of when I was franchising new stores for
Baskin Robbins up in Baltimore. Any time I heard from real
estate brokers or other would be entreprenuers up
Philadelphia or New Jersey way, they seemed to always talk
about 10% "commission". not too much around Bal'mer, and
never down in the DC and northern Virginia area. I guess
it's a regional thing.

From all I've ever read or heard, this "bounty" would be
other income to go on line 20, but of course if a room of
the apartment were home office, then a portion would be
reduction of home office expenses on schedule C.

- quote -

First, fully taxable to old tenant. And since there's no
business purpose of splitting 50/50, I can't see any
deduction, not even on schedule A.

Christmas Cheer$, both holiday and liquid,
Harlan Lunsford, EA n LA

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Basis: An apartment building offers (to tenants only) to pay
a "bounty" for new tenants who rent due to referrals from
the existing tenant. Is this payment considered taxable
income or a discount on rent? If taxable income, how is it
reported?

Suppose an existing tenant offers to split the payment with
the new tenant. Is the amount the new tenant gets taxable
income or a discount on rent? In either case, if the first
payment above is taxable income, is this one deductible
against it? How is it reported?

Seth

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