self employment income?


G

Gil Faver

taxpayer has, somewhat reluctantly, agreed to help her mother and aunt
substantially remodel a small rental bungalow so that it might once again be
rented. Aunt and mother stand back and do nothing, and taxpayer has all the
interaction with the contractor, etc. Property is owned by mother and aunt,
and not at all by taxpayer. Taxpayer will receive a small amount for her
efforts, say $5,000.00. Is this self employment income to taxpayer? She is
not in the business of renting property (this or others) owned by her, nor
is she in the business of remodeling.
 
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G

GSalisbury

Gil Faver said:
taxpayer has, somewhat reluctantly, agreed to help her mother and aunt
substantially remodel a small rental bungalow so that it might once again
be rented. Aunt and mother stand back and do nothing, and taxpayer has
all the interaction with the contractor, etc. Property is owned by mother
and aunt, and not at all by taxpayer. Taxpayer will receive a small
amount for her efforts, say $5,000.00. Is this self employment income to
taxpayer? She is not in the business of renting property (this or others)
owned by her, nor is she in the business of remodeling.
--
I'm not a tax guy but...
Why wouldn't it just be a gift for doing all of the work and move on?
Geo. S.
 
S

Seth

GSalisbury said:
I'm not a tax guy but...
Why wouldn't it just be a gift for doing all of the work and move on?
Because you don't get gifts for doing work, you get pay.

Seth
 
G

GSalisbury

Seth said:
Because you don't get gifts for doing work, you get pay.

Seth
OP said "...agreed to help her mother and aunt ..."
Isn't that family?
Don't families do each other favors?
Families sometimes say thanks presheateit
Geo.
 
H

Harlan Lunsford

GSalisbury said:
OP said "...agreed to help her mother and aunt ..."
Isn't that family?
Sure thing, that's family. However, it's also income to be reported.
Don't families do each other favors?
No doubt. I used to do my mother's tax return for free. And I still
do my wife's tax return for free, but without any "quid pro quo",
ifyougetmydrift.
Families sometimes say thanks presheateit
What does "presheateit" mean?

Ah yes! I went back and said it fast aloud. got it now.

ChEAr$,
Harlan Lunsford, EA n LA
 
G

Gil Faver

GSalisbury said:
I'm not a tax guy but...
Why wouldn't it just be a gift for doing all of the work and move on?
Geo. S.
not a gift. So, any thoughts on the self employment income questions?
 
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G

GSalisbury

dpb said:
GSalisbury wrote:
...

Except OP also said "_will_ receive" and the fact it doesn't seem to be
clearly a gift to the OP makes it look far more like a bribe than a
gift... :)
I guess ", somewhat reluctantly, " does make that case.
 
B

boostm3

taxpayer has, somewhat reluctantly, agreed to help her mother and aunt
substantially remodel a small rental bungalow so that it might once again be
rented. Aunt and mother stand back and do nothing, and taxpayer has all the
interaction with the contractor, etc. Property is owned by mother and aunt,
and not at all by taxpayer. Taxpayer will receive a small amount for her
efforts, say $5,000.00. Is this self employment income to taxpayer? She is
not in the business of renting property (this or others) owned by her, nor
is she in the business of remodeling.

--
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<< that may be imposed upon the taxpayer. >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are atwww.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
what I generally do in these cases which have multiple interpretations
is enter it in turbo tax both ways, and see which comes out better for
myself, the tax payer. Seems to me you have 3 options:

1) Take it as a gift and do not report it at all,
2) Take it as income, but assuming your not in the building trades
profession, report it on line 21 as 'Other Income'.
3) Take it as Self Employment income. If you do, you may be able to
funnel other deductions under the Self Employment banner and in some
cases, it will reduce your taxes. But youll also likely have to pay
Self Employment tax in addition to Income Tax.

How is it possible to have the same income treated in 3 such different
ways? Well, I think youll find, over time, accountants would respond
to your question so that all three interpretations would be
represented.. And thats one of the problems with our tax laws.. theyre
very Ambiguous, and Interpretation is 90% of the game.. So, so long as
you can make a case and justify the way you handled the money from a
tax perspective, youll be ok.. At the worst, it may be Disallowed.
So, which should you do? Id probably take it as a Gift, and not
report it at all!

========================================= MODERATOR'S COMMENT:
Please delete all non-essential parts of the message you are responding to.
 
D

dpb

Gil Faver wrote:
....
not a gift. So, any thoughts on the self employment income questions?
I'm not a tax pro, but the one-time aspect of this to me would qualify
it as "other income" and I'd report it on Line 21.

--
 
G

Gil Faver

Stuart Bronstein said:
Money given in exchange for services, even if not legally required to
be paid, is considered by the IRS to be taxable income. It's not
exactly the same, but look at a tip given to a waiter in a restaurant.
You have no legal obligation to leave one, and the size of the tip is
also up to you. However you give it because you received services, so
it is not a gift. It is taxable income.

Stu

aw, Stu. You are answering the easy question here. Any opinion on whether
it is self employment income? thanks.
 
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A

anne watson

Gil Faver said:
taxpayer has, somewhat reluctantly, agreed to help her mother and aunt
substantially remodel a small rental bungalow so that it might once again
be
***************************************
Bettcha the mother and aunt show it as an expense against the remodeling,
which gives the IRS a comparison point.
 
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