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qbi safe harbor for rentals held by partnerships

LindaSki
Level 2

I have client who owns 4 partnerships.  Each partnership owns one or two residential rentals.  No one partnership qualifies for safe harbor for QBI.  

Can I make an election to combine the income from the K-1's on the Form 1040 to meet the 250 hour test?  

If I can, how do I enter and generate the election form with the return?

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5 Replies 5
sjrcpa
Level 15

QBI is determined at the partnership level. Not the partner level.

An activity can generate QBI without the 250 hour safe harbor.


ex-AllStar
LindaSki
Level 2

I understand QBI can pass-through from each partnership.

My question is can I elect to combine the K-1 income from each partnership for the safe harbor election on the Form 1040?

When I read the rev proc and guidance it is confusing whether these are RPE's that can be combined.

I also cannot find anywhere on Lacerte input for electing to combine from K-1's.  There is an election to combine rentals from Sch E but no where do i see a place to elect to combine from my K-1's

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abctax55
Level 15

As Susan said - the ENTITY determines whether the activity qualifies for QBI.

The partner doesn't get to make that choice.

Former Chump..oops..AllStar...I used to be a people person, then people ruined it


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LindaSki
Level 2

I'm sorry but I must not be asking clearly enough.

Does the 250 hour safe harbor test have to be made at the entity level for each LLC/partnership or can the rental income be passed through for all entities and an election be made on the Form 1040 to combine the properties and meet the 250 hour test at the individual level.  

The regs. and procedures are not clear.

If it can be made at the individual level how do I get Lacerte to combine them for the election?

 

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sjrcpa
Level 15

The individual only gets QBI treatment for K-1 income if the partnership passed it through with QBI info.


ex-AllStar