 Reminders, net investment income tax, the NIIT, you may be subject to the NIIT, the net investment income tax, NIIT is a 3.8% tax on the lesser of net investment income or the excess of modified adjusted gross income, MAGI, basically your AGI, your adjusted gross income with some slight modifications, modified adjusted gross income over the threshold amount. So net investment income may include rental income and other income from passive activities, and this is one of the issues with rental property. One reason we oftentimes report it differently or on another form, other than a Schedule C. You might think, why don't we just report the rental property on the Schedule C because it's basically an income statement related to rental property with income minus expenses that rolls into the first page of the Form 1040, ultimately, like a Schedule C. That's what the Schedule E is doing as well, but the Schedule E, when we think about the rental property, sometimes we run into this issue of passive income that could have other tax implications related to it, and we also have possibly some differences with regards to then whether it's going to be subject to self-employment tax, so we'll dive in some of those issues in future presentation. Self-employed tax payments deferred from 2020. If you elect to defer self-employed tax payments from 2020, see how self-employed individuals and household employers repay deferred social security tax for more information about due dates and payment options. This is another unusual item of response to the coronavirus, and we can compare this response to the response they had to an employee-employer type of situation, which I think is useful because this is a common kind of scenario that comes up when the log is basically rolled out, so what they wanted to do was create a scenario where the employers can hold on to their employees longer during this time when they were shutting down businesses, even though their cash flows, of course, going to be tight during that time, one solution could be, well, maybe we can defer the payroll taxes, paying the payroll taxes later, and any time some idea like that comes up, what will then happen is people will say, well, what about the self-employed individuals? Because the self-employed individuals have to treat themselves as though there are an employer and employee of themselves, they're subject to social security and Medicare, they should get a similar kind of benefit. So that's a common theme that you will see happen. The law is going to be aimed at the big corporations, and then things like the flow-through companies, the partnerships, the sole proprietors are going to be like, hey, wait a second, you're giving them this big benefit, we should have a similar kind of thing happening on the smaller side of things. So in any case, introduction, do you own a second house that you rent out all the time? Do you own a vacation home that you rent out when you or your family isn't using it? These are two common types of residential rental activities discussed in this publication that we're going to go through here, and most cases, all rental income must be reported on your tax return. That's the general rule for income in general. Everything to the IRS is basically income, unless there's an exception to it. We have an income tax type of system. That means that income is actually bad, right? Because if you have income, that means you're going to be subject to the income tax on it. What we would like to have is actual income, stuff that we received that the IRS says is exempt from income that we don't have to be paying taxes on. But obviously, if we've got rental it's a rental income, you would think that the IRS would want their share of the rental income. But there are differences in the expenses you are allowed to deduct and in the way the rental activity is reported on your return. We can think of a lot of different unusual scenarios with the rental property. Remember, the rental property can be different than other types of businesses that we might think of. When we think about a Schedule C type of business, we report that on the Schedule C. We've got income minus expenses on it, and then we have to be subject to the self-employment tax, which could be quite significant. And if we have a loss, oftentimes we might be able to offset the loss, for example, against other income. When we have the rental property, we reported on a different schedule oftentimes for a few different reasons. One is that the IRS often thinks of the rental property as more of a passive type of income scenario as opposed to the Schedule C, which is an active type of business scenario. And there could be tax differences in the treatment for passive type of income. So we'll get in and also there could be different limitations with regards to the losses that could be different than like a Schedule C and the self-employment tax could be a different kind of situation if we're talking about not active income or passive income. So you have a similar structure to a Schedule C. It's going to be an income statement, income minus expenses, but then you've got some of these other concepts that come into play that we need to take into consideration. Okay, Chapter 1, discuss rental for-profit activity in which there is no personal use of the property. This is going to be our breakdown and we'll go through a lot of these items. We might not go through all of the details in our presentations. You can take a look at the publications for more detail, but this is the general breakdown. So it examines some common types of rental income and when each is reported as well as some common types of expenses and which are deductible. Chapter 2 discusses depreciation as it applies to your rental real estate activity. Now depreciation is going to be huge and oftentimes when people like first think about rental property, they don't really have a concept of depreciation opposed from or apart from like equipment depreciation and stuff rather than the building because they might be dealing with, you know, usually they deal with a home that isn't depreciated because it's personal property and the fact that we get some deductions for the home or personal or principal residence kind of confuses things further. So the general idea of remember for an income tax is if we have an income tax then we have it would make sense for us to tax basically the net income and therefore you would expect the types of deductions that are legitimate deductions in a natural income tax system would be those deductions that were ordinary and necessary to generate the income so that you would be taxing not the gross income but the net income. That would make sense because you had to expend the expenses to get the income and that would mean that personal expenses are usually not deductible under just a natural kind of income tax system. But oftentimes most people are dealing with taxes are dealing with people that have w2 income and the concept with the w2 income is that the employer is the one that's providing all the business expenses in order for the employee to earn the income therefore the employee just has income and doesn't really have any any kind of expenses so we don't see those kind of those natural expenses that you would expect to see in an income type tax system.