Rev. Rul. 72-331

Advice has been requested as to the treatment, for purposes of the Self-Employment Contributions Act of 1954 (chapter 2, subtitle A, Internal Revenue Code of 1954), of amounts received by the owner of a trailer park under the circumstances described below.

The owner allots a parcel of land for each trailer and maintains toilet, bath, and laundry facilities, city sewerage and electrical connections, and a roadway into the trailer park. He cleans and maintains the premises daily and furnishes hot water for the laundry facilities although the trailer owners maintain facilities inside of their trailers for the heating of water for other purposes and pay for their own electricity, having meters for determining the cost thereof. The trailer park owner is paid for the use of water by each of the trailer owners, with the amount depending on whether the water line is insulated. He furnishes no recreational facilities, but does manage the trailer park and generally does not accept individuals unless they agree to stay for at least 6 months. He receives a fixed monthly fee from each trailer owner in return for the land, services, and facilities provided.

Section 1402(a) of the Act provides, in part, that the term "net earnings from self-employment" means the gross income derived by an individual from any trade or business that he carries on, less the allowable deductions that are attributable to such trade or business. In computing net earnings from self-employment, rentals from real estate, together with the deductions attributable thereto, are excluded, unless such rentals are received in the course of a trade or business as a real estate dealer.

Section 1.1402(a)-4(c)(2) of the Income Tax Regulations, relating to the Self-Employment Contributions Act, provides that payments for the use or occupancy of rooms or other space where services are also rendered to the occupant do not constitute rentals from real estate and that, generally, services are considered rendered to the occupant if they are primarily for his convenience and are other than those usually or customarily rendered in connection with the rental of rooms or space only for occupancy.

Since the trailer park owner in the instant case cleans and maintains the grounds and maintains city sewerage, electrical connections, laundry, bath, and toilet facilities, the roadway into the trailer park, and facilities for the use of water by the owners of the trailers, he provides services other than those usually or customarily provided in connection with the rental of space only for occupancy.

Accordingly, it is held that the fixed monthly income received by the trailer park owner in return for the land, services, and facilities that he provides is not "rentals from real estate" within the meaning of section 1402(a) of the Act and is includible in computing his "net earnings from self-employment." This ruling pertains only to the Self-Employment Contributions Act and no inference should be drawn as to applicability to other areas of the tax law where a similar question might arise.