The vocabulary of clean books and IRS compliance.

IRS informational form issued by third-party payment platforms (Airbnb, Vrbo, Stripe) reporting unadjusted gross reservation volume paid by guests.

Under IRC § 6050W, platform processors report total gross revenue in Box 1a—including room rates, cleaning fees, and pass-through guest charges—without deducting host service fees (typically 3%), host cancellations, or refunds. Recording only the net bank deposit in your ledger causes a direct mismatch with IRS reporting, triggering automatic CP2000 inquiry notices. Reconciling requires booking gross payouts as revenue and separately expensing host fees on Schedule E Line 8.

IRS form used to report non-employee compensation of $600 or more paid to unincorporated independent contractors during the calendar year.

STR owners must file Form 1099-NEC with the IRS and furnish copies to contractors by January 31 for cleaners, handymen, hot tub technicians, and co-hosts paid $600 or more via cash, check, ACH, or debit transfer (Venmo/Zelle non-merchant payments). Payments processed through third-party credit card processors or third-party settlement networks (like Upwork or Airbnb co-host direct payouts) are reported on 1099-K instead, exempting the owner from 1099-NEC filing for those specific sums.

IRS regulation stating that rental activity with an average customer stay of 7 days or less is excluded from the statutory definition of rental real estate under passive loss rules.

Under Treasury Regulation § 1.469-1T(e)(3)(ii)(A), if the average period of customer use for an STR listing is seven days or less during the tax year, the property is not categorized as a traditional 'rental activity' for Section 469 purposes. Consequently, owners do not need to qualify as Real Estate Professionals (REPS) to treat rental losses as non-passive. As long as the host materially participates, tax losses (including accelerated cost segregation depreciation) can directly offset active W-2 and business income.

IRS statutory exclusion allowing homeowners to rent their primary residence or vacation home for up to 14 days per year completely tax-free.

Under Internal Revenue Code § 280A(g), if a residential property is rented for fewer than 15 days in a tax year and used by the owner for personal purposes for 14 days or 10% of rental days, the rental revenue is completely exempt from federal income tax. The owner is not required to report the income on Form 1040; however, operating expenses associated with those 14 days are also non-deductible.

Verifiable chain of contemporaneous records (bank feeds, receipts, platform statements, time logs) required during an IRS examination.

When an IRS Revenue Agent issues an Information Document Request (IDR) for an STR return claiming active losses or Schedule E deductions, standard bank statements alone are insufficient. Auditors require: (1) official platform payout reports reconciling to gross 1099-K figures, (2) itemized receipts for all expenses over $75 proving business purpose, (3) contemporaneous time logs proving material participation hours, and (4) verified monthly bank reconciliations proving the books were closed systematically.

An accounting entry made at the end of an accounting period to record unbilled expenses, accruals, or reclassify misallocated transactions.

In short-term rental accounting, AJEs are commonly used to: (1) separate annual insurance premiums into monthly accruals, (2) record annual depreciation entries, or (3) reallocate shared supply runs across multiple property accounts. In Roxby's governed workflow, accountants propose AJEs for host review and approval, preserving strict audit trails without silently modifying underlying bank feeds.

Tax incentive permitting accelerated first-year write-off of eligible property with a recovery period of 20 years or less.

Introduced under the Tax Cuts and Jobs Act (TCJA), bonus depreciation allows immediate deduction of qualifying assets (5-year furnishings, 15-year land improvements) placed in service. Under current statutory phase-down schedules, bonus depreciation rates scale annually (100% through 2022, 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and 0% thereafter unless extended by Congress).

Any mathematical variance between the ledger balance of cash and the ending balance shown on an official bank statement.

Common causes of STR bank reconciliation discrepancies include: (1) in-transit OTA payouts released on the last day of the month that settle on the 2nd of the next month, (2) outstanding checks written to contractors that have not yet cleared, (3) bank maintenance or wire fees unrecorded in the ledger, and (4) duplicate transaction imports from broken third-party sync plugins.

An engineering-based tax study that separates building acquisition costs into 5-year, 15-year, and 27.5-year asset classes.

Instead of depreciating an entire residential rental building over 27.5 years on a straight-line basis, a cost segregation study dissects building components. Personal property (carpeting, appliances, specialty lighting, furniture) is reclassified as 5-year property; land improvements (driveways, decks, fences, hot tub pads) are reclassified as 15-year property. When combined with the 7-day rule and material participation, reclassified assets qualify for bonus depreciation, producing large non-passive paper losses in Year 1.

Structured, indexed index of all general ledger accounts used to record assets, liabilities, equity, revenues, and expenses.

An STR-specific Chart of Accounts replaces generic retail categories with short-term rental sub-accounts. Revenue is bifurcated into `4010 Gross Rental Revenue` and `4020 Cleaning Reimbursement`. Cost of sales includes `5010 Host Platform Commissions` and `5020 Turnover Cleaning Labor`. Liabilities include `2020 Pass-Through Lodging Taxes` and `2010 Guest Security Deposits`. Operating assets include separate clearing accounts (`1020 Merchant Clearing - Airbnb`, `1021 Merchant Clearing - Vrbo`) to isolate payment timing differences.

The critical tax distinction between immediate maintenance deductions (repairs) and multi-year capitalized expenditures (improvements).

Under the IRS Tangible Property Regulations (Treasury Reg. § 1.263(a)-3), an expenditure is a capital improvement if it results in a 'Betterment, Adaptation, or Restoration' (the BAR test) to a building system or unit of property. Routine repairs (patching drywall, fixing a leaking pipe, replacing a damaged microwave under $2,500) are fully deductible in the current year on Schedule E Line 14.

A versioned record of a completed monthly close that restricts ordinary posting changes and records authorized reopening and correction history.

When a monthly close is completed, Roxby generates a Close Receipt recording balances, report totals, unresolved acknowledgments, and source states. The period rejects ordinary posting changes; authorized corrections use reopening and a revised close version.

Software component that synchronizes listing calendars, rates, and availability across multiple distribution channels (Airbnb, Vrbo, Booking.com, Direct).

Channel managers coordinate listing calendars across OTAs. Accounting workflows must review each supported source's payout cadence, available fee components, and tax-remittance information.

A contractual arrangement where a third-party co-host manages guest communications and turnovers for a percentage of booking revenue (typically 10% to 25%).

Co-hosting commissions must be accounted for cleanly: the property owner reports 100% of gross guest revenue on Schedule E Line 5, and deducts the co-host management fee on Line 8 (Commissions). If the co-host earns $600 or more during the calendar year and is paid outside of direct platform split tools, the owner must file IRS Form 1099-NEC.

IRS regulation allowing property owners to immediately expense tangible personal property costing up to $2,500 per invoice.

Under Treasury Reg. § 1.263(a)-1(f), STR operators without an applicable financial statement (AFS) can elect to deduct the full acquisition cost of tangible property (smart locks, mattresses, TVs, kitchen cookware, outdoor furniture) costing $2,500 or less per invoice or item in Year 1 rather than depreciating over 5 or 7 years. To claim this tax treatment, the taxpayer must attach an annual election statement to their timely filed Form 1040.

Accounting methodology where every transaction requires equal and offsetting debit and credit entries, preserving the fundamental equation Assets = Liabilities + Equity.

Single-entry cash spreadsheets fail in short-term rentals because platform payouts combine income, deductions, reimbursements, and asset settlements into one deposit. Double-entry ensures that when a $1,200 net payout arrives, the $1,000 gross rent is credited to revenue, $236 cleaning reimbursement is credited, $36 platform commission is debited to expenses, and $1,200 cash is debited to the bank account, proving that every penny is mathematically balanced and verifiable.

An independent website and merchant processing gateway (e.g. Stripe) allowing guests to reserve property stays without paying OTA platform service fees.

Direct bookings save the 14% to 16% guest service fee charged by OTAs. However, the host assumes merchant processing fees (typically 2.9% + 30¢), chargeback liability, fraud prevention, and the mandatory obligation to calculate, collect, and manually remit local Transient Occupancy Tax (TOT) directly to municipal authorities.

The accounting decomposition of a monthly mortgage payment into Principal, Interest, Taxes, and Insurance.

A mortgage payment is never a single line expense. Principal reduces the loan liability balance sheet account; mortgage interest is deductible on Schedule E Line 12; property taxes and homeowner insurance held in escrow are non-deductible balance sheet transfers until the lender actually disburses them to the municipality or insurer. Recording the full mortgage payment as a rental expense is a severe tax error.

Supplemental Income and Loss tax schedule used to report rental real estate income and allowable operating expenses.

Schedule E is the primary tax form for reporting short-term rental property performance when the activity does not provide substantial hotel-like services. Gross booking income is reported on Line 5, turnover cleaning on Line 7, OTA platform fees on Line 8, mortgage interest on Line 12, repairs on Line 14, and other expenses on Line 19. Net rental income reported on Schedule E is exempt from the 15.3% self-employment tax (FICA), unlike business income reported on Schedule C.

Profit or Loss from Business tax schedule for sole proprietorships and single-member LLCs subject to self-employment tax.

If an STR host provides 'substantial services' (daily maid service, guest meals, concierge tours, transportation) primarily for guest convenience, the IRS treats the operation as an active hospitality business rather than rental real estate under IRC § 1402(a)(1). Operating net profit must then be reported on Schedule C, triggering a 15.3% self-employment tax (Social Security and Medicare) on all net earnings in addition to ordinary income tax.

IRS tax form used to claim depreciation deductions on physical assets, Section 179 expenses, and vehicle mileage allocations.

Form 4562 documents capital asset basis, recovery periods (5, 7, 15, or 27.5 years), depreciation conventions (Half-Year or Mid-Quarter), and method (MACRS 200% declining balance or Straight Line). All furniture packages over $2,500, appliances, flooring overhauls, and structural additions must be tracked on an authoritative depreciation schedule attached to Form 4562.

IRS tax schedule used by partnerships and multi-member LLCs (Form 1065) to report rental real estate income and expenses.

When two or more individuals co-own an STR property through an LLC or partnership, rental activities are reported on Form 8825 rather than individual Schedule E. Net profit or loss flows from Form 8825 to Schedule K-1 for each partner based on their ownership percentage. If the STR qualifies for active business treatment (Schedule C rules) due to substantial services, the income is reported on page 1 of Form 1065 instead of Form 8825.

The total nightly lodging rent charged to guests before platform commission deductions, cleaning fees, or municipal taxes.

Gross booking revenue represents the true contractual revenue generated by the real estate asset. It is tracked separately door-by-door to analyze listing performance, average daily rate (ADR), and revenue per available room (RevPAR). For tax purposes, gross booking revenue is the primary revenue entry on Form 1040 Schedule E Line 5.

The fee paid by incoming guests intended to offset the cost of turnover cleaning between stays.

Contrary to common host belief, cleaning fees collected from guests are not non-taxable 'pass-throughs'. The IRS considers cleaning fee collections to be taxable gross receipts. To avoid paying income tax on cleaning revenue, the host must record the offsetting turnover labor and supply costs as operating expenses on Schedule E Line 7 (Cleaning & Maintenance), producing a net-zero or accurate margin.

The transaction fee charged by booking channels (Airbnb 3% split-fee or 14-16% host-only fee; Vrbo 5% commission + 3% payment fee).

Channel fees are tax-deductible operating expenses reported on IRS Schedule E Line 8 (Commissions) or Line 19 (Other Expenses). They must never be netted against gross rental revenue. Netting commissions directly against revenue reduces reported top-line income, causing automated mismatch flags when IRS algorithms compare your tax return against the gross figure reported on your 1099-K.

IRS criteria establishing regular, continuous, and substantial involvement in a business to deduct losses against non-passive income.

Under Treasury Reg. § 1.469-5T, an owner must satisfy at least one of seven tests to achieve non-passive status. For STR hosts with an average stay of 7 days or less, the two primary tests are: Test 1 (participating for more than 500 hours during the year) or Test 3 (participating for more than 100 hours and more hours than any other individual, including property managers, cleaners, or contractors). Keeping contemporaneous, detailed hourly time logs is mandatory to withstand IRS audits.

A temporary asset balance sheet account used to bridge the timing gap between guest booking confirmation and bank settlement.

When a guest completes an Airbnb stay, Airbnb releases payouts that often take 24 to 72 hours (or longer over weekends and banking holidays) to settle into the host's checking account. Posting transactions to a dedicated clearing account (`1020 Merchant Clearing - Airbnb`) allows the host to record earnings upon guest departure while matching net settlements to bank feeds without creating fictitious receivables or reconciliation errors.

An STR business model where an operator leases a residential property from a landlord under a commercial agreement and subleases it to short-term guests.

In rental arbitrage, the operator does not own the physical real estate and cannot claim building depreciation or mortgage interest deductions. Instead, the monthly lease payment to the property owner is classified as rent expense. All startup furniture, smart locks, and decor are depreciable or eligible for Section 179 / De Minimis Safe Harbor write-offs.

IRS Section 469 rule preventing passive real estate losses from offsetting active W-2, professional salary, or capital gains income.

IRC § 469 treats all rental real estate activities as passive by default, regardless of participation level, unless an exception applies. Passive losses can only offset passive income; excess losses are suspended and carried forward. The two main exemptions are the Real Estate Professional Status (REPS) with 750+ hours and the Short-Term Rental Exception (average guest stay ≤ 7 days combined with material participation).

Taxes collected directly from the guest that belong to local government entities and do not constitute host operating revenue.

Pass-through taxes must never be recorded as gross rental income. If a guest pays $1,000 for rent and $100 in local lodging tax, recording $1,100 as rental income falsely inflates taxable gross receipts and leads to overpaying state income taxes. Proper accounting debits the guest clearing account and credits a short-term liability account (`2020 Lodging Tax Payable`), which clears to zero when funds are remitted to the city or county.

Legal vulnerability where courts revoke LLC limited liability protection because personal and business finances were mixed.

Commingling occurs when an STR host pays personal grocery or utility bills from their rental LLC checking account, or pays listing expenses with personal cards without formal reimbursement. If a guest is injured on the property, opposing counsel can subpoena commingled bank statements to prove the LLC is an 'alter ego' of the individual, exposing personal homes, savings, and retirement accounts to liability. Maintaining strict separate bank accounts and verified accounting ledgers preserves the veil.

The bookkeeping process of separating available components of an OTA payout, such as gross rent, cleaning fees, host commissions, and local taxes.

OTAs do not deposit gross rent; they deposit a single net sum calculated as: (Gross Booking + Cleaning Fee + Extra Guest Fees) - (Host Service Commission) - (Withheld Taxes) - (Resolutions/Refunds). Payout decomposition unbundles this bundle, matching each line item to its respective revenue or expense ledger account, ensuring complete alignment with Form 1099-K reporting.

Balance sheet liability account (`2020 Lodging Tax Payable`) where municipal occupancy taxes collected from guests are parked until remitted.

Because occupancy taxes belong to local governments and not the host, funds collected for local taxes are recorded as current liabilities on the balance sheet. When the host files their monthly or quarterly TOT return, paying the municipality debits this liability account and credits cash, preventing tax funds from ever inflating income statements.

Operational software (e.g. Hospitable, Guesty, Hostaway, OwnerRez) used to manage guest communication, multi-calendar sync, dynamic pricing, and team scheduling.

While essential for everyday listing operations, PMS platforms are not double-entry general ledgers. They do not track bank account reconciliation, credit card expenses, mortgage payments, depreciation, or tax returns. Using a PMS without dedicated accounting software leaves hosts blind to true cash yield and vulnerable to tax audit discrepancies.

IRS tax designation under IRC § 469(c)(7) allowing qualifying taxpayers to treat long-term rental activities as non-passive.

To qualify as a Real Estate Professional, a taxpayer must perform more than 750 hours of services in real property trades or businesses in which they materially participate, and more than 50% of their total personal services for the year must be performed in real estate. W-2 employees with full-time non-real-estate careers cannot qualify for REPS; hence, high earners turn to the Short-Term Rental 7-day rule to unlock non-passive deductions without meeting the 750-hour REPS threshold.

Hotel-like services provided to guests that reclassify passive rental income into active business income subject to self-employment tax.

Under Treasury Reg. § 1.1402(a)-4(c)(2), services are considered 'substantial' when they are rendered primarily for guest convenience rather than property maintenance. Examples include daily room cleaning while occupied, cooked breakfasts, guided tours, and linen changeouts during the stay. Standard turnover cleaning between guest stays, Wi-Fi, trash removal, keyless self-check-in, and exterior maintenance are considered customary maintenance and do not trigger Schedule C reclassification.

IRS tax code section allowing business taxpayers to expense up to $1,000,000+ of qualifying business equipment and furnishings in the year acquired.

Unlike bonus depreciation, Section 179 expensing is subject to an active business income limitation (it cannot create an overall tax loss). Furthermore, property used in traditional passive residential rental activities does not qualify for Section 179. However, short-term rentals that meet the 7-day rule and are classified as an active trade or business can utilize Section 179 for furnishings, laundry machines, and operating equipment.

The review trail linking supported posted entries to their available source records, such as bank activity, receipt images, and OTA statement lines.

Source provenance links supported imported records and attached evidence to the entries derived from them, retaining available timestamps and transformation history for review.

Local municipal or county tax levied on guests renting temporary accommodations for less than 30 consecutive days.

Also known as Tourist Development Tax (TDT), hotel occupancy tax (HOT), or bed tax, TOT is assessed as a percentage of guest accommodation charges (typically 6% to 15%). While Airbnb and Vrbo automatically collect and remit TOT in many jurisdictions, in non-contracted counties the host remains legally liable for collecting the tax, holding it in a fiduciary liability account, and remitting monthly or quarterly filings to local authorities.

Financial statement that segments income, operating expenses, and net cash yield individually for each property listing in a portfolio.

Portfolio-wide reporting obscures underperforming properties. Unit-level reporting tracks individual listing RevPAR, cleaning fee profit margins, recurring utilities, and net operating income (NOI) before and after debt service. This door-by-door breakdown is legally required to complete Form 1040 Schedule E, which has separate columns (Columns A, B, C) for each physical rental address.