Marianne, thanks for joining Community!

“My clients wouldn't qualify under the rental property safe harbor election since they don't spend at least 250 hours a year on each property.”  The Safe Harbor election of 250 hours applies to the ENTERPRISE, not EACH property.

Additionally, service hours include services performed by owners, employees, and independent contractors and time spent on maintenance, repairs,  collection of rent, payment of expenses, provision of services to tenants, and efforts to rent the property. Hours spent by any person with respect to the owner’s capacity as an investor, such as arranging financing, procuring property, reviewing financial statements or reports on operations, planning, managing, or constructing long-term capital improvements, and traveling to and from the real estate are not considered to be hours of service with respect to the enterprise. Here is more on Safe Harbor provisions:

https://accountants-community.intuit.com/articles/1797483&src=51247

And the Safe Harbor is just one way your client can qualify as a Section 162 active trade or business. I think the December instructor had good intentions about the 1099 filing, but the subsequent guidance from IRS in January never mentions it.

Good luck!