Generally, payment received for equipment rental is income for self-employment tax purposes and cannot be reported on Schedule E. Instead, it should be reported on Schedule C where it will be subject to SE tax. In a Tax Court case, a taxpayer reported rental income for his vehicles and equipment used in the performance of self-employed services. The tax court ruled that the equipment rental in reality was self-employment income reportable on Schedule C (Walker, Charles, (1993) 101 TC 537).

Frequently, 1099-MISCs are issued from the entertainment industry reporting “rents.” An example is off-duty police officers who are paid rents for their motorcycles and other equipment. The so-called rents are actually SE income paid as rents to avoid the employer’s share of the FICA withholding.