{"id":281,"date":"2019-03-10T19:59:20","date_gmt":"2019-03-10T19:59:20","guid":{"rendered":"http:\/\/www.danaleecpa.com\/blog\/?p=281"},"modified":"2019-03-10T19:59:22","modified_gmt":"2019-03-10T19:59:22","slug":"rental-activities-and-sec-199a-qbi-deduction","status":"publish","type":"post","link":"https:\/\/www.danaleecpa.com\/blog\/rental-activities-and-sec-199a-qbi-deduction\/","title":{"rendered":"Rental Activities and The New IRC Sec. 199A QBI Deduction"},"content":{"rendered":"\n<p>If you have to report a rental activity on your tax return, you have probably wandered if you can use the new IRS Sec.199A QBI deduction. The answer is: it depends.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Three Ways To Qualify<\/h2>\n\n\n\n<p>There are 3 ways in which a rental activity may qualify for the qualified business income deduction:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>using the new safe harbor rule that the IRS just unveiled in the new <a href=\"https:\/\/www.irs.gov\/pub\/irs-drop\/n-19-07.pdf\">Notice 2019-07<\/a>.<\/li><li>if the rental activity rises to the level of a trade or business as defined by Reg. 1.199A-1, Operational Rules<\/li><li>if the rental activity rents the property to a commonly controlled business.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Notice 2019-07<\/h2>\n\n\n\n<p>In January 2019 the IRS published Notice 2019-07 that provides for a safe harbor rule for using the  Sec.199A  QBI deduction in a case of a rental activity:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>the taxpayer keeps separate books and records for each rental activity.<\/li><li>the taxpayer maintains contemporaneous records of time spent.<\/li><li>the owner, employees or contractors perform 250 or more hours of &#8220;rental services&#8221;.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Trade or Business<\/h2>\n\n\n\n<p>Trade or business means a<a href=\"https:\/\/www.law.cornell.edu\/uscode\/text\/26\/162\"> section 162 <\/a>trade or business other than <br> the trade or business of performing services as an employee.<\/p>\n\n\n\n<p>Section 162 doesn&#8217;t really define a trade or business, but it details the rules for taking the ordinary and necessary expenses encountered in carrying out a trade or business.<\/p>\n\n\n\n<p>Thus if a rental activity generates legitimate Section 162 deductions, the activity may use the  Sec.199A QBI deduction.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Self-Rental Activity<\/h2>\n\n\n\n<p>If a rental activity doesn&#8217;t rise to the level of a section 162 trade or business but the property is rented or licensed to a commonly controlled business as defined under \u00a71.199A-4(b)(1)(i), than the rental activity is treated as a trade or business for purposes of section 199A.  <\/p>\n\n\n\n<p>The new tax law contains many limitations and complex rules and it&#8217;s important to have a professional help you with your tax situation. <a href=\"https:\/\/www.danaleecpa.com\/contact.htm\">Give us a call <\/a>to see how we can help you.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you have to report a rental activity on your tax return, you have probably wandered if you can use the new IRS Sec.199A QBI deduction. The answer is: it depends. Three Ways To Qualify There are 3 ways in which a rental activity may qualify for the qualified business income deduction: using the new [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-281","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-uncategorized","7":"entry"},"_links":{"self":[{"href":"https:\/\/www.danaleecpa.com\/blog\/wp-json\/wp\/v2\/posts\/281","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.danaleecpa.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.danaleecpa.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.danaleecpa.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.danaleecpa.com\/blog\/wp-json\/wp\/v2\/comments?post=281"}],"version-history":[{"count":3,"href":"https:\/\/www.danaleecpa.com\/blog\/wp-json\/wp\/v2\/posts\/281\/revisions"}],"predecessor-version":[{"id":284,"href":"https:\/\/www.danaleecpa.com\/blog\/wp-json\/wp\/v2\/posts\/281\/revisions\/284"}],"wp:attachment":[{"href":"https:\/\/www.danaleecpa.com\/blog\/wp-json\/wp\/v2\/media?parent=281"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.danaleecpa.com\/blog\/wp-json\/wp\/v2\/categories?post=281"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.danaleecpa.com\/blog\/wp-json\/wp\/v2\/tags?post=281"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}