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7 Answers

Landlord isn’t reporting rental income on taxes, can he get in trouble?

Asked by: ubinas 1150 views YA Discussion

Through a strange chain of events, I learned that the landlord has not been reporting rental income on his assets. On top of that, he declared bankruptcy a year or so ago and on the forms he didn’t claim any rental income at all, despite renting out 3-4 houses! Can he get in trouble for this? He has over ten years of dodging taxes as well.
Hi Sophie, it shows that he filed a “Chapter 11″ for himself as an individual. But on the form where it asks about “all income from other businesses” it’s blank and for rental income it is also blank. The places that he gets rental income from though are his houses that he has listed on his bankruptcy petition. However, the “companies” that the checks are written to are LLC.

7 Answers

  1. Pat on Aug 29, 2012 Reply

    If this is true, he can go to prison.
    But you KNOW this.
    So what is your point in asking the question?

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  2. sophieb on Aug 30, 2012 Reply

    What the guy could have done is done a personal bankruptcy. His business probably is not a sole proprietorship so didn’t go on his personal bankruptcy. His business, if it was in trouble, would have gone in as a reorganization, a Chapter 13. Did he file a Chapter 13 for his business too? If not then his business is not in trouble.

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  3. Bash Limpbutt's Oozing Cyst© on Aug 30, 2012 Reply

    An individual can’t file Chapter 11. That’s a reorg plan for a corporation.

    His BK filing does not indicate tax fraud. In fact, when an individual files BK, their tax returns are pretty closely scrutinized and there are other returns filed in addition to their individual income tax return.

    Most landlords operate at a tax loss once mortgage interest, property taxes, depreciation and other business expenses are taken into consideration. The bankruptcy filing showing $ 0 income could be entirely legitimate and accurate. Most landlords make their profit when they sell their properties — that’s how I made my profits for sure — so the fact that the bankruptcy filing reports no income is irrelevant to whether he is reporting the income on his tax returns. Odds are nearly 100% that he is reporting it properly.

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  4. acmeraven on Aug 30, 2012 Reply

    Depending on how you became privy to this type information would potentially lead to a longer prison sentence than dodging taxes. Tread lightly, very lightly.

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  5. Casey Y on Aug 30, 2012 Reply

    Are those LLCs owned by him 100%? How could you possibly know the answer to that question anyway?

    Yes, this could be construed as fraud, but only if the LLC is operating at a profit. If operating at a loss, then the rent might not be considered income.

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  6. tro on Aug 30, 2012 Reply

    you may think you have learned the situation with your landlord but you are talking about two different entities here–he is either an individual who would report rental income on sch E
    or he has an LLC which more than likely is filed as a corporation, probably not a partnership
    the LLC pays its own taxes, claims its own income, ie. if the LLC is formed to manage the rentals, all that information would be on an 1120

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  7. the kid on Aug 30, 2012 Reply

    So he filed personal backruptcy and his LLC protected the rental income. The LLC owuld also be doing the taxes on that money. SO you really have no idea if he is paying taxes on it or not.

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