The Percent of Ownership field tells the program what portion of the rental or royalty activity belongs to you.
In most situations, the income reported to you has already been divided among the owners. If the amount you received represents only your share, you should enter 100% as your Percent of Ownership.
That's because 100% of the income being reported on your tax return belongs to you.
When Should I Enter 100%?
- The Form 1099-MISC, royalty statement, or other income statement reports only your share of the income.
- You receive payments directly for your portion of the property or royalty interest.
- The amount you are entering already reflects your ownership percentage.
Example
Steve owns a 3% royalty interest in an oil-producing property.
At year-end, he receives a royalty statement showing $150 of royalty income. The property owner has already calculated Steve's 3% share and paid him directly.
When entering the income on Schedule E:
- Royalty income: $150
- Percent of Ownership: 100%
When Should I Enter Less Than 100%?
Enter a percentage less than 100% only when the income and expenses being entered represent the entire property activity, and you need the program to calculate your share.
For example, if a rental property earned $10,000 and you owned 50% of the property, entering a 50% ownership percentage would allow the program to calculate your share of the income and eligible expenses automatically.
How the Program Uses the Ownership Percentage
- Rental income
- Royalty income
- Most rental expenses
Exceptions
- Travel expenses
- Car and truck expenses
- Prior-year unallowed losses
- Depletion expenses