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Rental Property & Business Does Not Qualify for QBI

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Level 1

How do you indicate in Proserices, a rental activity (does not meet 250 hours safe harbor) and business is not a Qualified Business for QBI in a partnership tax return?

The rental and business are not a specified trade or. service.

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8 Replies 8
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Employee
Employee

At this time, there is no way to mark the business as non-qualifying at the entity level. Proseries will calculate QBID which can then be adjusted at the individual level. 

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Level 15

I thought Intuit is looking at providing an option to override that presumption?

§1.199A-6(b)(3) requires RPE's to report to shareholders/partners the correct amounts of pass-through QBI, W-2 wages, and UBIA with respect to each qualified trade or business.  Shareholders/partners are to rely on such information reported on their K-1 from the RPE and will NOT be making another determination at their level as to whether an activity flowing through from the RPE is or is not a qualified trade or business and, therefore, take into account or disregard the QBI-related items reported on the K-1.

The only adjustment shareholders/partners must make at their level is to reduce the QBI for deductions attributable to the respective qualified trade or business (which may incluce §179 allowed, 1/2 SE-tax deduction, etc.).

Please confirm Intuit is working on a solution as the K-1's prepared with PS will not otherwise meet the stipulated regulatory requirements for §199A.

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Still an AllStar
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Level 1

see bottom of 8825 work sheet there is a quickzoom to a 199A worksheet by activity. I think this will allow you to prepare information you want to give clients

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Level 1

Proseries should have known to provide option as to whether trade or business 

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Level 15

Not meeting the safe harbor does not mean it is not a Qualified Trade or Business.


ex-AllStar
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I bet there's a check box for the rental property. (That the way Lacerte handles this.)

BTW, remember that the safe harbor is only a safe harbor. Applying the Section 162 standard, probably lots of small landlords show regularity, continuity and a profit motive.

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Level 1

250 hr safe harbour I believe is for 2019 and has to be documented. For 2018 it may be assumed that taxpayer met safe harbour belive.

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Level 15

No, the 250-hour requirement is not assumed to have been met, even for 2018.  All that Notice 2019-07 says is that contemporaneous records are not required before 2019.  Taxpayers who make elect to utilize the safe harbor should still have some level of documentation to substantiate the hours spent on rental services (which really isn't much) and must sign the statement, which includes the 250-hour requirement, under penalties of perjury.

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Still an AllStar
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