QBID rental amended return

Last year client did NOT want to treat his rental properties as qualified businesses. The 250-hour safe harbor scared him, and I wasn't informed enough to know that Section 162 applies to most rental properties, as seems to be the case from several postings I have read here, and from what I have heard in seminars.

So now I want to amend his 2018 tax return and treat each rental property as a qualified business for the QBID. Reckon I will prepare an amended return like I would any other, attach explanation and supporting schedules. Just wondering if anyone else has done this (with QBID rental properties), and if anyone has seen anything anywhere or anything special that should be considered in preparing such amended returns.

Thanks in advance for any guidance.

Thought I would try again. Did any of you file 2018 tax returns last year with one or two rental properties that you and your client felt did NOT qualify for the QBID, but have now reconsidered (Sec. 162) and WILL treat these properties as QBI properties on the 2019 tax returns? And if so, are you planning to amend 2018 tax returns?

My impression is that a lot of people mistakenly believed that the "safe harbor" had to be met to take QBI for a rental. And either out of timidity or because they were misinformed many taxpayers (over 800,000 according to IRS's estimate) failed to take advantage of their 199A deduction.

Amending returns to correct that error could be a very profitable business this year. Maybe a good way to get new small business clients.

If the rental properly is a Section 162 business (and most profitable ones probably are) there does not seem to be much sense in failing to amend the 2018 to claim the missed deduction. Just as you would amend to claim any missed deduction that your client qualified for if it saved him or her a material amount of money.

For the last several years I have worked full time (and more) in the fields of tax software development and the production of C.E. material. I am no longer in public practice. Make of that what you will when weighing the value of my opinion. It just seemed right to mention given the way your question was phrased.

If the rental properly is a Section 162 business (and most profitable ones probably are) there does not seem to be much sense in failing to amend the 2018 to claim the missed deduction. Just as you would amend to claim any missed deduction that your client qualified for if it saved him or her a material amount of money.

Totally agree. There’s nothing special about this situation. In your 1040X Explanation, just put down, “Taxpayer inadvertently failed to claim the Sec 199A deduction on his originally filed Form 1040. The taxpayer is filing this amended return to claim that deduction herein.”

Tenletters. Can you direct me to where you read that the IRS said 800,000 failed to take advantage of their 199A deduction? Would like to read that article. I expect they were referring to QBI in general, not just real estate owners, though I hope they mentioned them. Thanks.

It was at taxnotes.com, it is a subscription website. I might be able to forward it to your e-mail address if you are willing to send it to me. You are correct, I think. They were referring to all cases of the deduction being overlooked not just rentals.

Thanks. Too busy to read it now. Maybe I'll ask later. But you said the article did mention rentals.