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Sec 199A Self Rental to C Corp

Technical topics regarding tax preparation.
#1
Goodday  
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Property owner leases building to C Corporation that he wholly owns.
(triple net lease). Is he eligible for QBI 20% deduction on the rent income?
If it was leased to a S Corp, it s yes...but unsure about a C corp as tenant.
Thank-you.
 

#2
j3cpa  
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Hi. can you explain to me why the tenant’s entity matters as to why the landlord qualify for QBI or not?

There is a new guidance on rental activity for QBI. Have you look at that?
 

#3
Noobie  
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Source: https://www.forbes.com/sites/anthonynit ... c1430bd9f0

"Self-rentals

The final regulations do provide one exception to the trade or business requirement for rentals: A rental activity will be treated as a Section 162 trade or business if it is rented to a "commonly controlled" trade or business owned by the taxpayer. Thus, a “self-rental” is granted de facto Section 162 status, even if the activity might not have otherwise satisfied that standard.

To be "commonly controlled," the property must be rented to an individual or pass-through (no C corporation), and the same owner -- or group of owners -- must own 50% or more of both the property and business. For these purposes, the 50% standard is measured by using the attribution rules of Sections 707 and 267, which is a departure from the proposed regulations."
 

#4
dave829  
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Goodday wrote:Property owner leases building to C Corporation that he wholly owns. (triple net lease). Is he eligible for QBI 20% deduction on the rent income? If it was leased to a S Corp, it s yes...but unsure about a C corp as tenant. Thank-you.

Under 1.199A-1(b)(13) of the proposed regulations, it didn’t matter whether self-rental to a commonly-controlled entity was a C corporation or an S corporation, but this was changed in 1.199A-1(b)(14) of the final regulations to say that self-rental must be to an S corporation ("RPE"). T.D. 9847, 2019-09 I.R.B. 670 says that for 2018, taxpayers may rely on the proposed regulations, but for 2019 and after, the final regulations apply.

So, for 2018, my answer to your question is "yes," but for 2019 and after, it's "no."
 


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