Pass Thru 20% question

Apr 14, 2019 1 Replies
M

I am not clear on the new 20% pass thru taxes



What if we (husband and I) have some commercial property which I believe qualifies for QBI and we have a personal service biz which does not qualify for as QBI. Lets say the QBI income and non QBI income are 50/50



And let's say our combined income is over the $415,000 threshold.



What is our situation in this case? Do we get the 20% deduction on the QBI?


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A

Here is my understanding: I am going to assume that you own commercial property that you rent. I am also going to assume that you are not paying anyone wages. As such, the steps are as follows:

  1. Show that you meet the safe harbor for rental property identified in IRS Notice 2019-07 and you therefore have a qualified business.
  2. Failing the safe harbor, show that your rental business rises to the level of being a Sec. 162 trade or business.
  3. Assuming you get by 1 or 2, your 20% QBID would be limited to 2.5% of the acquisition cost (not counting land) of the commercial property.
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