199-A Safe Harbor Election

My software has a 199-A Safe Harbor election for each rental property. 20 Rentals. Must client sign each one of them? Is there a way to do only one listing all the rentals? That is how I did it last year. Using Pro Series. Also, the K-1's are showing the QBI and the UBIA for each property. It is not giving me totals. Is anyone else seeing this?

Aggregate?

I have not aggregated the rental properties. Can someone direct e to a great reference for aggregating? I have not done it as I did not think the LLC qualifies.

I am thinking that I can add the totals for QBI and UBIA and include it with attached information to the K-1's. 6 partners.

When you say aggregate......are you talking about doing the election to aggregate?

Bell -- have you read through Rev. Proc. 2019-38? The information in there seems to answer your question.

A tangent...but have you examined the case law on trade or business related to rental real estate? 20 rentals seems like a trade or business to me, which would mean the safe harbor isn't necessary, but I don't know all of the facts.

Aggregate?

I only see one trade or business in the OP.

There is an election to treat all rentals as one activity. Technically not an aggregation but it has the same effect. Your software probably provides it. I think that Drake does.

This is an LLC with 20 rentals. Yes, they qualify as a trade or business and qualify for the QBI. I was doing the safe harbor election. I do not see an election in my software to treat all rentals as one activity which is technically, not an aggregation. What election is it?

You'll find it described about two paragraphs in to Rev. Proc. 2019-38. Only one election statement is needed. Drake attaches it more or less automatically (you have to view the return twice to get it to work). No signature is required. It was required in the earlier Rev. Proc. but they dropped that in 2019-38.

If your software doesn't have it you can probably make your own in Word, print to .pdf and attach.

SECTION 3. RULES OF APPLICATION
.01 In general. This safe harbor is available to taxpayers who seek to claim the
deduction under section 199A with respect to a rental real estate enterprise as defined
in section 3.02. If the safe harbor requirements are met, the rental real estate
enterprise will be treated as a single trade or business as defined in section 199A(d)

Rev. Proc 2019-38 is coming up, .......that is what I have been looking at. One for each property.......which I now know that I can just list all the properties on the one copy. But........mine has the qualifications for the safe harbor about the 250 hours etc. .......and mine requires a signature. Is this what I should have?

One for each property

Be careful about treating each rental property as a separate rental real estate enterprise, because under RP 2019-38, you need to satisfy the 250-hour test for EACH rental real estate enterprise.

I work for a large regional firm, and the general consensus is that a rental activity will meet the trade or business criteria if the taxpayer is involved on a continuous and regular basis, for profit. So yes, using the 162 standard. There are ample cases where just one property was enough to meet the standard.

No-one could see the value of making the SH election. A few partners said what happens if they challenge the SH and the TP loses? End of story?

A few partners said what happens if they challenge the SH and the TP loses? End of story?

No.

Rev Proc 2019-38: If an enterprise fails to satisfy the requirements of this safe harbor, it may be treated as a trade or business for purposes of section 199A if the enterprise otherwise meets the definition of trade or business in § 1.199A-1(b)(14).

OK, I am back after alot of research. I aggregated the properties for the 199-A treatment. I unchecked the safe harbor election. That eliminated all those individual forms to sign. On the 199-A summary, they are asking for an explanation of why I am aggregating. Is a statement, like "Aggregating similar commercial properties for 199-A tax treatment" Is that OK?
I did the QBI for this partnership in 2018, but I did not do the aggregation. I put in one safe harbor statement. At the time, I thought it would cover the entire enterprise not just a property by property basis. Thank you all for your super guidance.

My software has a 199-A Safe Harbor election for each rental property. 20 Rentals. Must client sign each one of them?

Per Mellum Tax email: Question: “One provision of this safe harbor for 2018 was the requirement for a tax return preparer to include with the client’s tax return a statement signed by the taxpayer that stated the safe harbor provision had been discussed with the taxpayer. I don’t find this statement in the 2019 software. Is it still required?” Here is the answer:

An IRS Notice in January 2019 contained this safe harbor provision in a proposed revenue procedure, including the statement referred to above. The final revenue procedure (RP 19-38) came out in late September 2019. It does not require this particular statement to be attached to the tax return. Therefore, if you are looking at a 2018 return which used the safe harbor provision and are trying to find this statement in your 2019 software, you probably will not find it since it is no longer required.