Schedule E - QBI

[Yardley CPA]

MFJ return.  Wife works as a school teacher, the husband is a homemaker.  He also manages their rental property, collecting rent, assisting the tenants, scheduling maintenance, dealing with vendors...etc.  All in excess of 250 hours for the year.  In reading through 199A provisions posted on this site, I believe they qualify for the deduction.  In order for the deduction to calculate on the Sec 199A worksheet, both the "Qualified Business" and "Service Business" need to be checked.  Just ensuring I'm not missing something or misinterpreting the provision??  QBI calculates to $1,290.

 

[Terry D EA]

I don't think you need to check "Service Business". Not sure cause I don't use ATX. My thoughts are the service business is the SSTB for accountants, attorney's Dr's etc.

[Yardley CPA]

44 minutes ago, Terry D said:

I don't think you need to check "Service Business". Not sure cause I don't use ATX. My thoughts are the service business is the SSTB for accountants, attorney's Dr's etc.

Thanks.  I didn't think so either at first but

If I don't check it, QBI is not calculated

[TAXMAN]

I thought that safe harbor was for 2019 going forward. Not applicable to 2018? Did I miss the boat?

[Lion EA]

Safe harbor can be used for 2018. The contemporaneous log isn't required for 2018, must start in 2019. At least that what I understand. No rentals yet, so academic and not practical knowledge!

[EricF]

Yardley CPA, check "qualified business" but not "service business" on the Activities tab.  The QBI should flow from there to the Net Qualified Business Income tab for your activity, and then to the QBI Deduction tab for your activity.  All QBI from all activities is summed up on the QBI Deduction Summary tab and the deduction is computed there.  The number on line 6 on that tab flows to Form 1040 page 2.

[Yardley CPA]

21 minutes ago, EricF said:

Yardley CPA, check "qualified business" but not "service business" on the Activities tab.  The QBI should flow from there to the Net Qualified Business Income tab for your activity, and then to the QBI Deduction tab for your activity.  All QBI from all activities is summed up on the QBI Deduction Summary tab and the deduction is computed there.  The number on line 6 on that tab flows to Form 1040 page 2.

Thanks, Eric...that's my issue.  If I don't check "Service Business" nothing flows.  If I check "Service Business" everything populates as I believe it should.  I realize the Schedule E  Rental is not a "Service Business" but checking that field is the only way to populate the figures. 

[EricF]

24 minutes ago, Yardley CPA said:

Thanks, Eric...that's my issue.  If I don't check "Service Business" nothing flows.  If I check "Service Business" everything populates as I believe it should.  I realize the Schedule E  Rental is not a "Service Business" but checking that field is the only way to populate the figures. 

That's not the way it works for me.  If your software is making you do that and you're sure you're getting the right result, fine.  But at upper income levels, whether in the phaseout range or above that range, you will get a different QBI deduction if it's a service business rather than a regular qualified business.