In a refinancing for an apartment building, which IRS form lists rental income and itemized operating expenses?

• A. Schedule C
• B. Schedule L
• C. Form 2106
• D. Schedule E

Answer: (D)

Rental real estate income and the related operating expenses are reported on Schedule E, Supplemental Income and Loss. This form is designed specifically for rental activities, allowing you to list gross rents and deduct expenses such as property management, repairs, insurance, property taxes, utilities (if paid by you), and depreciation. The result is the net rental income or loss that flows to Form 1040. In a refinancing situation for an apartment building, Schedule E captures the property's financial activity in a way that reflects rental performance, including depreciation as a major deduction.

For comparison, Schedule C is used for income and expenses from a business you actively operate as a sole proprietor; Schedule L is a balance sheet; Form 2106 reports unreimbursed employee business expenses. These forms serve different purposes, so they don’t appropriately list rental income and operating expenses for a rental property.