That’s a good question.
In Chief Counsel Advice (CCA) 202151005, the IRS opined on this issue.
But before we get to what the IRS said, understand that the CCA’s conclusions cannot be cited as precedent or authority by others, such as you or your tax professional.
Even so, we always consider what the CCA says as semi-useful information and cover it here, along with some analysis that goes beyond what the IRS came up with. Here goes.
The Exact Question
To be specific, the CCA asks whether net income from renting out living quarters is excluded from self-employment income under Section 1402(a)(1) of our beloved Internal Revenue Code, when you’re not classified as a real estate dealer.
Key point. If excluded under IRC Section 1402(a)(1), you don’t owe self-employment tax on your net rental income. ... Log in to view full article.