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Screen Rent-2 - Rent and Royalty Property - QBID, Passive (1040)
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Additional Rental Information
Small taxpayer safe harbor election
Enter a description of each eligible property for which the taxpayer is applying the safe harbor provision under IRC Regulation 1.263(a)-3(h). For purposes of this election, in general, a small taxpayer is defined as an individual whose average annual gross receipts for the three preceding tax years is less than or equal to $10 million. Under the safe harbor, the taxpayer may deduct (rather than capitalize) certain amounts paid for improvements made to the eligible building property. The election will automatically print and include it in the contents of the e-file, when filing electronically. The election is applied on a year-by-year basis, and once made, the election is irrevocable.
note
The small taxpayer safe harbor election must be filed with the return annually and applies only to the current tax year. Therefore, if data was entered in this statement in the prior year, the information automatically proformas to the subsequent year. An FYI diagnostic is produced when the proforma'd election information is present. If the election does not apply for the current tax year, remove the data in the statement.
Carry non-business expenses to indicated home office
Enter information in the
Form/Schedule
, Unit
, and Home ID
fields to tie the non-business or personal portion of this property's expenses to a home office in another activity. The Business use percentage entered in either the Rent and Royalty Property - General Information, or Expenses section is used to determine the personal use percentage. Applicable expenses entered on the Rent screen include: insurance, mortgage interest, qualified mortgage insurance, repairs, supplies, real-estate taxes and utilities. Home office information other than these expenses must be entered in the 8829 screen, or the Asset tab for the home office activity in order to transfer the expenses to Form 8829 or the Business Use of Your Home Worksheet.Suppress personal home office expenses to Schedule A
Enter
X
if you do not want the personal portion of interest and taxes from the property to transfer to Schedule A. If the Suppress carry of mortgage interest and taxes to Schedule A
field at the top of this screenis marked, this field will be automatically marked.Net inc for home office #1 / #2
UltraTax CS allows you to enter expenses for business use of the home for two separate offices in the same tax year. Use these fields to enter the force amount of net income applicable to each home office. These amounts are used to calculate the limitation of expenses on the Business Use of Your Home Worksheet.
Qualified Business Income Deduction
Rental activity rises to the level of a Section 162 trade or business
Enter
1
to indicate that this activity is a trade or business eligible for the qualified business income deduction. This activity is included on the appropriate Form 8995 or 8995-A.Section 199A safe harbor
Enter X if this activity meets the section 199A safe harbor requirements.
Safe harbor enterprise grouping number
Enter the safe harbor group number to indicate this activity is part of a safe harbor enterprise. This will be reflected on the safe harbor required statement.
Qualified business income (Force)
To calculate the Qualified Business Income Deduction, UltraTax CS uses the Schedule E, Page 1, rental income or loss amount, then includes various additions and deductions. To view the calculated amount, see the Qualified Business Income Calculation Worksheet for Schedule E. To use an amount other than the default, enter an amount in this field. Enter zero (0) if the activity does not have any qualified income.
Qualified property
Enter the amount of the unadjusted basis of qualified property used in this trade or business. When you use the asset module , the amount calculates and transfers to this field. This amount is only used on Form 8995-A, Qualified Business Income Deduction and not Form 8995, Qualified Business Income Deduction Simplified Calculation.
Regulation Section 1.199A-4 aggregation grouping number
To include this trade or business in a grouping for the qualified business deduction under the rules of Regulation Section 1.199A-4, enter a group number. Use the same code for all the trade or businesses in the same group. UltraTax CS combines all group members into one calculation. Form 8995-A, Qualified Business Income Deduction, Schedule B – Aggregation of Business Operations is produced only when the Form 8995, Qualified Business Income Deduction Simplified Worksheet is not used.
Passive Activity and Other Information
Passive activity code
Enter the appropriate activity type code.
Entities with codes
1
and 2
are treated as passive. Entities with codes 3
or 4
are treated as non-passive.If entities with passive codes of
3
or 4
have passive carryovers, they are considered to be former passive activities. Income and losses from former passive activities are reported as follows.- If the current-year net income is less than the prior-year suspended losses, both prior-year suspended losses and current-year net income report on Form 8582.
- If the current-year net income is equal to or greater than the prior-year suspended losses, neither amount reports on Form 8582.
- If there is a current-year net loss, only the prior-year suspended losses are reported on Form 8582.
The passive portion of entities with a passive code of
3
are treated as other passives. Those with a code of 4
are treated as rental real estate.Aggregation group
To include this activity in a passive grouping, enter the aggregation group number here. Units with the same aggregation number report as one item in the statement worksheets for Form 8582. All of the entities in an aggregation must have the same passive code.
note
Non-passive activities (codes 3 and 4) cannot be part of an aggregate grouping. Use aggregation groups for Form 8582 passive activity purposes only. Each member of an aggregation group must have the same passive activity code. See Form 8582 instructions and IRS regulations for more information about proper groupings.
Reg. 1.469-4(d)(1) group
Enter a unique group number to include this activity in a Regulation 1.469-4(d)(1) grouping of a rental activity within a trade or business activity. When grouping activities under Reg. 1.469-4(d)(1), do not use a number that has been used in the Aggregation group field.
The entire group is nonpassive for reporting purposes. Each member of the activity must use passive activity code 3, that is nonpassive. Since the group is nonpassive, the group income does not report on Form 8582 and is not considered net investment income for Form 8960 purposes. The income or loss reports on the appropriate forms and schedules used regularly.
note
- Use Group disclosure code to make any required disclosures for the Reg. 1.469-4(d)(1) group.
- Use the aggregation grouping when the entire activity is considered rental real estate or other rental. Forms 8582 and 8960 will complete as necessary.
Group disclosure code
Enter the appropriate code applicable to this member of a passive activity aggregation group or Reg. 1.469-4(d)(1) group.
The statement required by Rev. Proc. 2010-13 is produced using this code and the Aggregation group. The taxpayer must file written disclosure statements with the tax return for the year in which two or more activities are grouped together for the first time (essentially serving as the election to group those activities), or for a year in which changes are made to existing groupings, including when a new activity is added to an existing group.
note
- Disclosures are not required for pre-existing groupings that remain unchanged. Once you start a grouping, you must disclose any change to the group per Rev Proc 2010-13. Deciding if and when to group activities requires careful tax planning. Consult Form 8582 instructions, Rev Proc 2010-13, IRS Publication 925, and Thomson Reuters Checkpoint for more information on grouping activities.
- The aggregation group and the Reg. 1.496-4(d)(1) group can use the group disclosure code. Do not use the same group number for one type of group that is already entered for another grouping.
Include rental with active participation in Section 179 business income
Mark this field to include the income or loss from this activity in the section 179 business income on Form 4562. The calculation of business income for section 179 purposes does not include income from passive activities. The passive activity code must be
2
for rental real estate with active participation for this option to include the activity income.Election history
Use the attached statement to record details about the elections taken for this rental unit. The statement includes the following fields.
- Description:Enter a brief description of the election taken.
- Tax Year:Enter the tax year the election was taken.
- Effective Period:Enter the election's effective period. Some elections are perpetual, while others cover only the tax year taken.
- Comments:Enter any additional information about the election. For example, enter information about an election that was revoked.
note
- Enter the election number assigned to the election in the year it was taken. Learn how to view and edit tax elections to find a table of election numbers or review a list of all 1040 elections available.
- To print an election report, enterXin thePrint election reportfield inElect, located in theElectionsfolder.
- Election information proformas to theElection Historystatement.
- Non-activity-based elections are in theElection Historystatement in theElectscreen, located in theElectionsfolder. Activity-basedElection Historystatements are in the following locations to trackDescription,Tax Year,Effective Period, andComments.ScreenFolder1099RRetirement4835-2Farm RentalC-3BusinessF-3FarmRent-2Rent & Royalty8697, ACA TaxTaxesK1-7K1 1065, 1120SMortgIntItemized
Passive Activity Carryovers
Enter last year's regular and AMT passive loss carryovers for this activity. If applicable, last year's client data has proforma'd. If the
AMT
fields are blank, UltraTax CS assumes there are no AMT carryovers. To enter state-related carryover amounts, use the St CO screen, or use the State allocation spreadsheet.Section 179 carryover
In the fields provided, enter last year's section 179 carryover for this activity. In future years, this information will proforma automatically. To enter state-related section 179 carryover amounts, use the St CO screen, or select the Allocation button in the Rent-2 screen and use the State allocation spreadsheet.