Campgrounds can be taxed in many different ways, depending on the elections, the owners, personal taxation strategies and how the entity was formed. Schedule E is a form that is used for rental properties, mostly or royalties, and has its place in the tax code.
However, an operating campground is not one of those. Schedule E is for passive activities and in most cases operating a campground will not qualify as a passive activity. There are some specific rules you have to look at, but if you have someone who is checking guests in and out who is emptying the trash, or maybe visiting with people, those were all aspects of an operating business.
A passive business would not have any employees or have owners who are working in the business. So the problem is that the taxation is incorrect and this could result in a large penalty or assessment if you’re audited. Most other forms of that entity would be subject to self-employment tax or social security and Medicare taxes, and a Schedule E is not. So there’s a big difference when it comes to the bottom line of taxation.
If your campground is operating on a Schedule E, I’d love the chance to talk with you, to help you remedy that situation and determine what truly the best way is for you to be taxed. I’m Donna Bordeaux with CampgroundAccounting.com. If you have that situation, please shoot me an email at email@example.com.
Donna Bordeaux, CPA with Campground Accounting
What happens when you send two CPAs out into the relaxing outdoors to camp? You get CampgroundAccounting.com. Donna and Chad have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They camp and travel across the country every chance they get, so it’s just a natural fit that they focus their CPA skills on helping campground owners throughout the USA grow their businesses and minimize the impact of taxes. They understand the key performance indicators and specialized issues that face RV park owners every day.