FAA6.N Examples : 26 Self-Employment Income (SEEI/SEEW) Examples : E Rental – Self-employment Example
Rental – Self-employment Example
Murray owns two separate duplex apartments.
He rents three of the apartments and lives in the fourth. The duplexes are connected to a single water meter. The water expense for the duplexes is billed to Murray.
Murray spends approximately 25 hours per week managing his rentals.
For CA purposes, Murray's rental income is considered self-employment. Murry is eligible for the standard 40% self-employment deduction. Key RA in the TYPE field on SEEI. Key the income (I) and expenses (E) on SEEW. AZTECS then applies the 20% earned income deduction.
For NA purposes, since Murray spends MORE than 20 hours per week managing the property, his rental income is treated as self-employment. AZTECS applies the 20% earned income deduction and the standard 40% self-employment deduction because there is verification that at least one allowable business expense exists.
Key one-fourth of the water expense (WA) on EXNS as an allowable shelter expense.