Rental income is inherently passive from a trade or business with or without the safe harbor, except it does not automatically rise to the level of §162 trade or business unless it meets the common law facts and circumstances tests.  If a taxpayer elects to use safe harbor, it "will be treated as a trade or business solely for purposes of section 199A and its regulations."  It does not make the rental enterprise a §162 trade or business.

The issuance of 1099-MISC is not a bright-line test although it might demonstrate a taxpayer's intention to manage the activity as a trade or business.  If other facts and circumstances are not supportive of the claim the activity rose to the level of §162 trade or business, it may still be deemed form over substantance.