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QBI deduction signed statement as it relates to Rental Real Estate

lnelsoncpa
Level 1

In order to take Section 199A QBI deduction for Rental Real Estate, the IRS states that the taxpayer must attach a signed statement to the return, stating they meet the requirements. I dont see anything like this in place. Is Lacerte going to include something like this? 

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TaxMonkey
Level 8

That is not true.  You do not need to attached a signed statement to the return in order to claim a QBI deduction.


I believe what you are referring to is the safe harbor statement found in Notice 2019-17.  It is not required to meet the safe harbor requirements to claim QBI, as is clearly stated in the notice. I doubt anything has been directly implemented yet, you would prepare your own statement and attached it as a pdf.  The requirements an be found on page 9 of Notice 2019-17:


https://www.irs.gov/pub/irs-drop/n-19-07.pdf

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4 Replies 4
TaxMonkey
Level 8

That is not true.  You do not need to attached a signed statement to the return in order to claim a QBI deduction.


I believe what you are referring to is the safe harbor statement found in Notice 2019-17.  It is not required to meet the safe harbor requirements to claim QBI, as is clearly stated in the notice. I doubt anything has been directly implemented yet, you would prepare your own statement and attached it as a pdf.  The requirements an be found on page 9 of Notice 2019-17:


https://www.irs.gov/pub/irs-drop/n-19-07.pdf

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George4Tacks
Level 15
So other do not need to look it up, here goes:
".06 Procedural requirements for application of safe harbor. A taxpayer or RPE must include a statement attached to the return on which it claims the section 199A deduction or passes through section 199A information that the requirements in Section 3.03 of this revenue procedure have been satisfied. The statement must be signed by the taxpayer, or an authorized representative of an eligible taxpayer or RPE, which states: “Under penalties of perjury, I (we) declare that I (we) have examined the statement, and, to the best of my (our) knowledge and belief, the statement contains all the relevant facts relating to the revenue procedure, and such facts are true, correct,
and complete.” The individual or individuals who sign must have personal knowledge of the facts and circumstances related to the statement. "

@TaxMonkey Could the election added in screen 46 "Other Election" and the signature of the tax return would qualify as a signature for the election?

ex-AllStar
rbynaker
Level 11
To expand on the point that I think TaxMonkey is trying to make.  You only have to attach a statement if you are relying on the safe harbor rules of N-19-07.  If you are basing your "trade or business" determination on other factors (i.e. "facts and circumstances" supported by code, regs, court cases, etc.) then you would not attach a statement.

Rick

PS: But yes, at this point I would make my own statement using the language required by the safe harbor regs and have the client sign it before scanning it to a PDF and attaching it to the tax return.  There are arguments that the general return signature covers the return and any attached statements, I'm not sure I'm buying it though since the regs specifically call for a signed statement.  If relying on these regs, I'd err on the side of caution.
p fisher
Level 1

I'm not sure why you all ignore Rev Proc 2019-38 which was the final rev proc on the subject issued in September of 2019.  IRS Notice 2019-17 (issued in April of 2017) is just a PROPOSED rev proc.  While the proposal contained a signature requirement, the final rev proc did not.  It just says that the original timely filed return mus include "a representaion"  that the requirements of the rev proc were met.   The notice 2019-17 says that the statement must be signed  “Under penalties of perjury, I (we) declare that I (we) have examined the statement, and, to the best of my (our) knowledge and belief, the statement contains allthe relevant facts relating to the revenue procedure, and such facts are true, correct,and complete.”  That language is nowhere in Rev Proc 2019-38