Form 1040 - How to claim QBI safe harbor on rental real estate per IRS Notice 2019-07 ?

[SBTS]

Hello Community:

There is an article on the ProCommunity that shows how to make a Safe Harbor election for real estate however when I go screen 18 of the software (Lacerte 2019), I am not seeing the option to select "Claiming safe harbor on rental real estate per IRS Notice 2019-07."

Can someone please help?

Many thanks in advance.

KoolDude

[itonewbie · Accepted solution]

Assuming you are referring to TY2019, Notice 2019-07 had been made obsolete by Rev. Proc. 2019-38.

The input page has also changed.  The box you referred to no longer exists.  Instead, enter 1 on the line for Rental real estate enterprise number if claiming safe harbor (unless you have other properties to aggregate).  This will trigger Lacerte to generate the statement to be filed with the return.

[SBTS]

Thank you so much!  In case client has multiple properties to aggregate, how should I proceed?

Thanks again very much!

[itonewbie]

NP, @SBTS!

If you are aggregating multiple rental properties, you will use the same number for all of the same rental real estate enterprise.  For example, if you are aggregating properties A, C, and D as one enterprise and B and E as another enterprise, you will enter the following on the line for Rental real estate enterprise number if claiming safe harbor under each respective property:

1 for A, C, and D
2 for B and E

Two safe harbor statements will be printed for these enterprises.  One for A, C, and D and another for B and E.  Each of these safe harbor statements will include another page that lists the properties that are within that particular enterprise.

[SBTS]

Understood.  Thank you so much.  One final question, does the taxpayer have to sign the safe harbor statement like before (2018)?

[itonewbie]

Unlike Notice 2019-07, the Rev. Proc. does not indicate that there is a requirement for signature on the statement.  So, no, it shouldn't be required.

[SBTS]

THANK YOU SIR !!!

My interpretation was the same as your.

[itonewbie]

NP, @SBTS!

[mjpayne55]

Great thread, thanks for the responses.  Any idea how to enter the specific information into Form 8995-A?  I need to change the name from "Rental Real Estate Enterprise 1" to the actual entity name and EIN.

[itonewbie]

These are grouped by numbers and that's how these will show up on the form, even if more than one of these entities come under one SMLLC, which is a DRE.

[bthshba]

Did they get rid of the feature to generate statements? I have criticals to attach them as PDFs.

[itonewbie]

The statement is still required and is still generated, except it doesn't need to be signed.

[Elite CPA Corp]

Can someone pls help me with this:  

I have 2 properties on Sch E.  Both property types are listed as "commercial".  I need to elect safe harbor and an aggregate both property. So, I input 1 in safe harbor election box of Schedule E of 1040 for 2019 tax year and a 1 in aggregation box with explanation and marked yes to treat it as QBI.  I repeated this for the other property too but aggregation is not being created. 

[itonewbie]

What do you mean aggregation is not being created?  Do you see a safe harbor statement for the two properties under one enterprise?  When you look at the QBI calculation, do you see these being included?

[Ze]

When I entered "1" in the "Rental real estate enterprise number if claiming safe habor" box of Screen 18, in Lacerte 2020, it seems it's not working. not sure if this is because Lacerte 2020 is different on the section. could you please help? 

Many thanks!