Bodie7 stated, "Hard to prove if the PM's put in 250 hours." If 250 hours can't be proven and even though everything else may be okay, the IRS may pursue the penalty of perjury route. However, I believe that claiming the QBI deduction based on one's belief that an activity is a trade or business doesn't contain the same possible legal ramifications. TaxGuyBill, you stated, "A Safe Harbor means the IRS can not question that it qualifies as a Trade or Business." Technically, that is not true - Read this comments by the IRS: "A rental real estate enterprise that satisfies the proposed safe harbor may be treated as a trade or business solely for purposes of section 199A and such satisfaction does not necessarily determine whether the rental real estate activity is a section 162 trade or business. Likewise, failure to meet the proposed safe harbor would not necessarily preclude rental real estate activities from being a section 162 trade or business." You also mentioned that an auditor may deny the QBI deduction if Forms 1099-Misc aren't filed. That does not follow any US income tax law and auditors can't just do as they wish - laws must be followed. We agree to disagree?
