hedgeslaw
Level 3

A "Material Participation" check box for real estate profession loss already exists on 1040, Sch E for example, but an ERROR MESSAGE appears if the check box for being a "Real Estate Professional" is not marked. However, the Material Participation for getting the QBI deduction does not require taxpayer to be a real estate professional. But many landlords qualify for the QBI deduction that are not real estate professionals. This is because the definition of Material Participation for both purposes (loss limitation and QBI deduction) is the same for both, and the 2 most common and easiest qualifications to meet are (1) 100 hours of participation by taxpayer and spouse (2) no one else participates more that taxpayer and spouse. But the loss limitation rules are relaxed if the taxpayer meets the additional qualifications for becoming a real estate professional.  This is not to be confused with neither the 250hr Safe Harbor Elections under Rev Proc 2019-38 nor Notice 2019-07, nor the Sec 162 Real Estate Business (Holiday Inn), nor the special Bed and Breakfast-7day or Less Stay provisions. Please add a check box in the QBI section of rental activities for "material participation for QBI."  Marking this proposed check box would trigger the QBI calculations. This proposed check box should be on the Individual module, form 1040, Sch E,  as well as Trust and Estates module, the Partnership module and Corporate modules.

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