Which tax form requires the reporting of rental income and expenses?

C is the correct answer because Schedule E is specifically designed for reporting supplemental income, which includes rental income and expenses. This form captures income derived from rental properties, royalties, partnerships, S corporations, estates, trusts, and other sources. Taxpayers use this form to detail the revenue generated from rental properties, as well as the associated deductible expenses, such as repairs, maintenance, and property management fees.

In contrast, Form 1040 serves as the main individual income tax return and does not have the detailed breakdown for rental-specific figures; it includes a summary of income sources. Schedule C is utilized by sole proprietors to report income and expenses from business activities but is not intended for rental property income. Form 1065 is used by partnerships to report income, deductions, and credits, but it does not apply to individual rental property owners. Therefore, Schedule E is the appropriate form for taxpayers to report their rental income and expenses accurately.