Q. I have a RV that i have financed. I have a company that manages and rents it for me. The management company issued me a 1099-Misc and I also have a record of expenses. I was only able to use it last year for about a week. I don't personally/formally have a business but I'm generating income. Should I file as though I have a business with the RV asset and depreciation? Seems like a huge deduction. Any references you can provide to look into this further would be appreciated!
A. When you purchase an asset and hold it out for business use, yes it should be reported on your income tax return, and if you make $400 or more from revenue you are legally required to claim this income. In your case, you should file a Schedule E to report both the income and expenses from your RV rental. However, once you "take back" the asset or convert it to personal use, you will no longer be able to claim business deductions and if this should happen mid-year, you would need to pro-rate all expenses.