A LEGAL REVIEW

The information contained in the presentation package is only an estimate and might vary depending upon the circumstances of each employee and their tools and/or equipment inventory and your business activity.

DOCUMENTATION:

Enclosed with your order you will find a determination letter from the IRS in Washington DC and a brief explanation of an “Accountable Plan.” The accountable plan is pursuant to Section 62c of the code and is detailed on the document labeled “Accountable Plan.” The program complies with all requirements of the code. There are also several rulings on the program and wage and rental income definitions, which will be enclosed in your order for your review.

INCOME REPORTING:

Statements from district offices indicating that the income by the renter or employee can be reported on Form 1040 Schedule E, as rental income. The income can also be reported on Form 1040 as Misc. income if the taxpayer does not plan on depreciating their tools and/or equipment. However the income is reported, the fact remains that it is not subject to employment tax and is passive rental income in nature.

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