Question

Raj is self-employed. He operates a business that rents water sports equipment by the hour. During the current year, he had rental income of $275,000. Where is Raj's rental income reported on his tax return?

Answer 1

Raj's rental income from his business of renting water sports equipment would be reported on his personal tax return, typically on Schedule C (Profit or Loss from Business) of Form 1040. As a self-employed individual, he would report the gross income from his business operations, which includes the rental income. After reporting his income, he can also deduct allowable business expenses related to his equipment rental service on the same Schedule C form, which ultimately affects his taxable income.