199A

[mcorn]

For a 1041, I transferred all my data from 2018 to 2019.  I have determined that one of the two real estate rental properties reported on the 2018 return may actually qualify as a trade or business under Section 162 to permit a QBI Deduction.  The software will not let me eliminate the property that doesn't qualify from the Schedule E so that I can prepare another Schedule E to report the two properties differently.  How can I make this change for 2019?

[TaxGuyBill]

What do you mean by "software will not let me eliminate the property"?   You need to be specific with how you are trying to do it and what the program does to "not let" you do it.

But before that, why do you want to eliminate that one?  Can't you just fill out the QBI information for that property?

[mcorn]

Thank you for your reply.  As you can discern, I am struggling with the software.  My thinking is that the one rental property which generates QBI should be on one Schedule E, and the one that doesn't should be on another Schedule E.  The software will not let me delete any properties off Schedule E.  Combining the two on one Schedule E seems to require that all of the income, from both properties, will either be deemed QBI or none of the income will be deemed QBI.  I gather the inability to delete a property from Schedule E arises because I reported both rental properties on one Schedule E in 2018.  Thus my problem.

[sjrcpa]

So you aggregated them and treated as one activity?

[mcorn]

I gather that is what I did, filling out both rental properties on one Schedule E in 2018, as I would have prior to Section 199A.  How do I disaggregate them for the 2019 return?  Thanks.

[TaxGuyBill]

First, let's confirm the software you are using.  Are you using ProSeries?

Did you enter the rentals on ONE "Asset Entry Worksheet" or on TWO "Asset Entry Worksheets"?  Using two worksheets will still only use 1 Schedule E, but the two rentals are listed in separate columns of Schedule E.

[mcorn]

Thanks again for your reply. I am using ProSeries.  The odd thing about one of the rentals is that the taxpayer has not invested a cent in the building.  The landlord, my taxpayer, rented essentially the land to the tenant who built a Royal Farms store on taxpayer's land and pays all expenses.  So there would not be an asset entry worksheet for this rental, which, as a beyond triple net lease, does not generate QBI.  Nevertheless, each rental is listed in separate columns on Schedule E.  Thanks.

[TaxGuyBill]

Sorry, I meant "Rental Worksheet" (and if it is in two columns, you are using two separate rental worksheets).

Because you are using two separate Rental Worksheets, everything should be good.  You should be able to enter the QBI information on the one Rental Worksheet, and it shouldn't affect the other rental at all.

[mcorn]

Thank you again for your response.  What I filled in was one property's information in Column A and the other property's information in Column B of Schedule E.  If that is separate rental worksheets, then okay.  I still can't induce the software to report one property as having QBI and other as not.  At this point, I will just not report any rental income as QBI.  Thanks for your help.

[TaxGuyBill]

I just tested it out and it is working fine for me.

When I check the QBI box on the one rental worksheet, it shows up on Form 8995.  Only that rental shows up, not the other one.  If I check the QBI box on the second rental worksheet, it also shows up on Form 8995.  If I uncheck the QBI box on the first rental, it is taken off of Form 8995.

So QBI on Form 8995 is only showing the rental that has the QBI box checked.  It does not force all rentals to be all or nothing.  You can select one as QBI and not the other.