Final Regs for 199A

[TaxGuyBill]

If it said this in the regulations, I missed it. Can you point it out? Or is this just a CYA?

That is only if you apply the "Safe Harbor" for rentals in Notice 2019-7.


.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.

https://www.irs.gov/pub/irs-drop/n-19-07.pdf#page=9

[CPS Tax Services]

I'm really confused on the rental property thing. Have a customer with 3 rental properties. Does he qualifies for the QBI for the net income of the 3 rental's? Here are the facts: He is owner of the 3 properties; he rents them on his own; collects the monthly rental payments from tenants; he's in charge of repairs; he drives there anytime needed. So does he qualifies for QBI?

[New York Enrolled Agent]

I'm really confused on the rental property thing. Have a customer with 3 rental properties. Does he qualifies for the QBI for the net income of the 3 rental's?

How can you possibly expect an answer? You basically provide zero facts.

[TaxGuyBill]

Does he qualifies for the QBI for the net income of the 3 rental's?

If it is a self-rental, yes.

If it rises to the level of a "Trade or Business", yes.

If it does not rise to the level of a "Trade or Business", no.


As for whether or not it rises to the level of a "Trade or Business", that is a facts-and-circumstances thing, and can often be a "gray area". However, you will want to read the IRS Notice 2019-07 it see if the taxpayer meets the "Safe Harbor" of being classified as a "Trade or Business". In addition to other thing, the Safe Harbor requires 250 hours of activity towards the rentals.

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