I live near a sports venue that has a pro football team with 6-8 games per year. There are also occasional concerts (e.g. Bruce Springsteen). I can fit lots of cars on my lawn and I can make quite a few bucks when there is a game or concert. Are the proceeds taxable?
Now consider code section 280A (g) which says that I get no deductions nor declare any income if the rental period is less than 15 days. So, if I only rent parking spaces for 14 days of any calendar year, can I invoke this statute?
It actually says (emphasis is mine):
Notwithstanding any other provision of this section or section 183, if a DWELLING UNIT is used during the taxable year by the taxpayer as a residence and such DWELLING UNIT is actually rented for less than 15 days during the taxable year, then? (1) no deduction otherwise allowable under this chapter because of the rental use of such DWELLING UNIT shall be allowed, and (2) the income derived from such use for the taxable year shall not be included in the gross income of such taxpayer under section 61.
Your lawn or sidewalk is not a dwelling unit. You are operating a parking lot business. Your income and expenses would go on Schedule C assuming you operate it as a sole proprietor.
Rent your house or rooms in your house for 14 days or less and the income is tax-free.
Also note, that the zoning in your neighborhood probably does not allow the operation of a parking lot. You would have to check with your town or city..... but that's not a tax issue.
If you operate an illegal enterprise can you claim expenses?
If you operate an illegal enterprise can you claim expenses? ===============Yes, except for dealings in Schedule 1 drugs, and bribes.
Does he get to claim depreciation, and if so how is it calculated on only 14 days use? And is it 27.5 year or something else?
My understanding is that expenses are not deductible but accoridng to the recent decision on marijuana, cost of goods is deductible. There are no cost of goods here. I'm not sure if depreciation is deductible.
My understanding is that expenses are not deductible but accoridng to the recent decision on marijuana, cost of goods is deductible. There are no cost of goods here. I'm not sure if depreciation is deductible. ================== The cost-of-goods deduction is not an [indirect] expense.
Depreciation is not deductible for drug dealers.
Does he get to claim depreciation, and if so how is it calculated on only 14 days use? And is it 27.5 year or something else? =================== Depreciation of what? Land is not depreciable.
In a normal rental situation, there's depreciation on the building, but not the land. If one owned a parking garage, or paved lot, depreciation would apply, but here, it's a lawn, nothing to depreciate. If the arrangement were legitimate, he could deduct expenses, the care needed to repair the lawn and maintain it.
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The grass?
___ Stu
On 9/1/12 8:21 AM, JoeTaxpayer wrote: If the
There seems to be some confusion. D. Stussy replies were accurate. Renting space on your lawn is not an illegal operation that would deny the deduction of ordinary and necessary business expenses. The mere fact that one may violate a zoning ordnance or some covenant or restriction on the deed, does not deny one the right to take deductions.
The tar, concrete, etc on the land.
The town of Foxboro, Massachusetts recently passed a law prohibiting that practice.
Jeff
The town of Foxboro cannot pass a law prohibiting the use of IRC 280A(g). It looks like they passed a law banning the practice of renting your lawn.
(illegally), you can avail yourself of deductions/depreciation (if any), and probably you can use IRC 280A(g) to exclude the income from taxation. But I don't think IRC 280A(g) applies, as that statute only applies to a rental of your house or room in your house. So you will have to pay income tax.
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