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Does income received from renting out a room in a personal residence qualify for a QBI deduction?

meinfeldt
Level 2
 
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itonewbie
Level 15

According to Federal Tax Day, a number of speakers, including those from AICPA and Council for Electronic Revenue Communication Advancement (CERCA), at the Oct 16 public hearing for the proposed regulations have asked the IRS to provide clear guidelines on when Sch E activities would rise to the level of a §162 trade or business.  The rationale is that this should avoid taxpayers applying different interpretations and simplify tax administration.

It is also reported that the "regulations are expected to be finalized before the 2019 tax filing season."

In other words, the short answer is dunno yet but watch out for further development.

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Still an AllStar

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itonewbie
Level 15

According to Federal Tax Day, a number of speakers, including those from AICPA and Council for Electronic Revenue Communication Advancement (CERCA), at the Oct 16 public hearing for the proposed regulations have asked the IRS to provide clear guidelines on when Sch E activities would rise to the level of a §162 trade or business.  The rationale is that this should avoid taxpayers applying different interpretations and simplify tax administration.

It is also reported that the "regulations are expected to be finalized before the 2019 tax filing season."

In other words, the short answer is dunno yet but watch out for further development.

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Still an AllStar
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abctax55
Level 15

A recent thread on whether rentals "qualify" for 199A 

https://accountants-community.intuit.com/questions/1778761-does-a-schedule-e-rental-property-qualify...

In your case, my concern would be whether the rental rises to the level of a trad or business, given the related party interaction.

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abctax55
Level 15

As in an AirBnB scenario?  Is it reported on Sch C or Sch E?

C = I'd say yes

E = I'd say we don't know yet.  The IRS guidance issued so far is about as clear as the air in most of Northern CA right now.

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meinfeldt
Level 2
this is a Schedule E situation...I just downloaded the initial ProSeries '18 program...Sch C income is counted as QBI....but I don't see where Sch E items are flowing to the QBI worksheet
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Marc-TaxMan
Level 8
Gotta wait for the updates.  Not yet happening for E, or K-1, or ?????
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abctax55
Level 15

related?

https://accountants-community.intuit.com/questions/1750423-what-expenses-can-be-deducted-for-a-perso...

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meinfeldt
Level 2
Yes, these questions are related and pertain to my personal situation...
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sjrcpa
Level 15
I would not think that this situation is a trade or business. No QBI deduction IMHO.

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abctax55
Level 15
I agree - I think it would be tough to meet the "trade or business" requirement.
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itonewbie
Level 15
That would be my view as well.
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Still an AllStar
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meinfeldt
Level 2
Thanks to all for the feedback...I'll try to be patient...I am trying to do my personal tax planning and learn the new program changes before the holidays!
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abctax55
Level 15
YVW....what you are dealing with personally isn't pleasant. Then you throw in uncertain tax considerations.
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