Pub 17

Rental of Personal Property

   If you rent out personal property, such as equipment or vehicles, how you report
   your income and expenses is generally determined by: 

     1.Whether or not the rental activity is a business, and 
     2.Whether or not the rental activity is conducted for profit. 

   Generally, if your primary purpose is income or profit and you are involved in the
   rental activity with continuity and regularity, your rental activity is a business. See
   Publication 535 for details on deducting expenses for both business and
   not-for-profit activities. 

   Reporting business income and expenses. If you are in the business of renting
   personal property, report your income and expenses on Schedule C or C-EZ. The
   form instructions have information on how to complete them. 

   Reporting nonbusiness income. If you are not in the business of renting personal
   property, report your rental income on line 21 of Form 1040. List the type and
   amount of the income on the dotted line to the left of the amount you report on line
   21. 

   Reporting nonbusiness expenses. If you rent personal property for a profit,
   report your rental expenses on line 31 of Form 1040. Enter the amount and "PPR"
   on the dotted line to the left and include the amount of your deductible expenses in
   the total amount you enter on line 31. 

   If you do not rent personal property for a profit, your deductions are limited and
   you cannot report a loss to offset other income. You report these rental expenses
   on Schedule A (Form 1040).