This article explains why ProConnect Tax may not include rental real estate income in a Qualified Business Income (QBI) calculation and how to identify a property or activity as qualified.
ProConnect Tax doesn't automatically include most Schedule E rentals in QBI calculations due to guidance in IRS Pub. 535 which says rental real estate qualifies for a QBI deduction if it meets the requirements of a safe harbor or is a section 162 trade or business.
The program will calculate QBI for Schedule E activities marked as land, self-rentals, real estate professionals, or as claiming safe harbor. If none of those conditions apply, an override is available to indicate the activity is a qualified trade or business.
- Notice 2019-07 also provides a safe harbor under which a rental real estate enterprise will be treated as a trade or business for purposes of the QBI deduction.
For more information
Overview of the qualified business income (QBI) deduction
Qualified Business Income (QBI) Defined
Understanding qualified business income (QBI) reductions
Resources for Qualified Business Income (QBI) in ProConnect