2 Apartment Home with 1 Apartment Rented

[ruthc]

Client has a 2 family home with 1 of the apartments rented and client lives in the other apartment. Any repairs that affected the whole house have been allocated to each apartment. Any repairs for just the rental apartment are expensed/depreciated at 100% to the rental. I have explained to the owner what they have to do if they want to consider the 199A deduction including the distinct financial accounts and 250 hours broken down, etc. In the past they used just one checking account for the whole house. If they have a repair/maintenance that is for the whole house which would have an allocation for the rental portion, how would they be able to have a separate financial account just for the rental portion of that expense (lawn maintenance, plowing, and hours, etc) if the compoany bills them for the total in one invoice?

The financial amount of this rental is not a whole lot of money. I think it really should not be considered a business for the 199A deduction. They have generated insignificant profits and losses in the past. They have never prepared 1099's, and don't wish to. Many years did not have anything over $600 to do any 1099's. I suggested paying by credit card in the future.

After reading the above do you think I am on the right track in not regarding this as a business for the deduction? I just want to make sure my thinking is ok.

[Dude]

low profit is not a factor but added responsibility of issuing 1099's is when it comes to rentals. Show him what he would save with QBID and then ask him if this is worth the aggravation of increased record keeping.

[ruthc]

Having prepared their taxes in the past tells me the amount of any potential deduction wouldn't give them the incentive to do any extra work. I even offered to prepare the 1099's for them if needed and they declined. They definitely will not document anything needed for hours either. They are just plain lazy people that shows me that any money they would save is not important. I even had a problem getting info for the $500 deduction for the mother living with them as a dependent. I know the deduction is valid but they did not want to supply proof the mother's health insurance or social security number or anything else for that matter. They said just to forget the deduction if need be. Although I am in the business to have them pay the least taxes available, but I am not going to beg them to do what is needed. Under the present IRS rules, and if they just say for me not to list them as a business, how would I complete the return? I do plan on having them sign a summary of our discussion noting they do not want to be listed as a business.

[Dude]

I think you just do a normal schedule E, not take QBID and have them sign something and or make notes to that effect. They dont want to be a business they want to be a pass through.