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if you are on the cash basis for tax reporting how do you treat

receipt of funds on a...
if you are on the cash basis for tax reporting how do you treat receipt of funds on a triple net lease? the rent received is income, what about the insurance/property taxes in the triple net receipts? are they reportable income on schedule e?
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Answered in 50 minutes by:
10/15/2012
geedubya55
geedubya55, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 358
Experience: 17 years experience in business and individual taxation specializing in small business and farming
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Thank you for using Just Answer.

On the cash basis, you report on Schedule E the actual amount of cash received during the year. With a triple net lease, the lessor is responsible for paying certain expenses. If the lessor pays them directly, the is no effect on your tax return. However, if the lessor pays you for those expenses, and then you pay the actual expense, then you would include the amount received from the lessor as income and then you would deduct the expenses for insurance, property taxes, etc. on your schedule E. That way, you can deduct those expenses and you are only taxed on the income that is left after expenses.

I hope my response has been helpful to you. If you need any further information, please don't hesitate to ask. Thanks again for using JustAnswer.

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Customer reply replied 5 years ago

great, thanks, XXXXX XXXXX in calendar year 2011 triple net payments received (in addition to lease income) was $50,000


 


in calendar year 2011 there were no payments for property taxes, insurance, etc


 


so, the entire $50,000 is income for a cash basis taxpayer?

Yes, that is correct. Income is included in the year received, and expenses are deducted in the year paid.
geedubya55
geedubya55, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 358
Experience: 17 years experience in business and individual taxation specializing in small business and farming
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