Technical topics regarding tax preparation.
3-May-2021 11:00am
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Taxpayer and spouse own 4 real estate rental properties – 3 are single family homes and 1 is a mobile home park with multiple single family rentals. Each property is held in its own LLC – so there are four 1065 returns. All are operating at a profit.
From what I understand the aggregation rules are the same regardless of if property is held directly or via a passthrough. Must all residential real estate be aggregated - even if it's different types of residential real estate? The mobile home park meets the 250 hour safe harbor rule. The others do not. Can three single family homes be aggregated while the mobile home park is not? It is residential but it is different in nature than the single family homes. Is there any downside to aggregating?
3-May-2021 11:41am
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Your title says QBI, but here you speak of aggregation. Two different things.
QBI has to do with a Qualified Rental Enterprise, so that's what you're looking for. Clearly, they should mark all properties as eligible for QBI all things considered. Whether a QRE is necessary or not, I don't know...
Aggregation is about qualifying for active treatment, maybe? I've done that a couple times....
3-May-2021 8:05pm
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Yes, I am looking to group them together for Qualified Rental Enterprise.... not for active treatment.
I am wondering what the downside is and if the mobile home park must be part of it because it is residential.
4-May-2021 11:48am
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chicagocpa wrote:Taxpayer and spouse own 4 real estate rental properties – 3 are single family homes and 1 is a mobile home park with multiple single family rentals. Each property is held in its own LLC – so there are four 1065 returns. All are operating at a profit.
You're not confident that these are trades and businesses under case precedence?
5-May-2021 4:48pm
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You can't combine rental activities in separate entities into one RREE for safe harbor purposes. Each must be a qualified trade or business on their own (and if you are looking at the safe harbor, meet the safe harbor on their own). If they are each a trade or business on their own, you can then, if they meet the tests, combine them into one T&B under the 199A aggregation rules. These tests seem difficult the meet for rentals as generally separate rental properties do not depend on one another.
https://www.taxprotalk.com/forums/viewtopic.php?f=8&t=14307
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