Nice job DanielV01, it looks like your post improperly influenced at least one taxpayer.
If anyone is relying on Section 162 to take the QBI deduction without electing the Safe Harbor I suggest researching further into this section or consult with a truly knowledgeable tax consultant.
Look further even within the referenced article which states: Case law provides that a Sec. 162 trade or business entails a profit motive and requires considerable, regular, and continuous activity.
Regulations offer ambiguous rules to determine whether a rental real estate activity qualifies as a trade or business for QBI purposes.
Keep in mind that Rental Income is automatically deemed Passive Income and has been historically. Most rental property owners do other income producing activities (Regular job, etc.) and most manage their rental properties in addition to their main job. Unless you are in a real estate profession, can prove such activity is your main activity and that you do it continuously you will have a very difficult time trying to prove that your rental income is not passive. Trying to prove a Section 162 trade or business is done on a case by case basis. Burden of proof always falls on the taxpayer. If you are relying on this section make sure you are prepared to provide evidence that you spend most of your time related to rental activities. I own (11) rental properties and yet I would have a difficult time proving that. For most of my rental properties my hands-on involvement is sporadic and a number months could pass where I don’t do any maintenance or work aside from depositing the rent and paying a bill or two which are setup on autopay anyway.
Now why would anyone take the risk with Section 162 if the IRS has already provided them with a remedy (SAFE HARBOR)?
