Oh, Carl,
Yes my line 26 is negative this year due to high repair costs. Only recently was this income slightly positive since there was no more mortgage interest deduction.
However, if I were a qualified trade or business I would still be facing my original concern which is my SEC179 deduction would be severely limited by my business income limitation from line 11 on form 4562. My wife and I are both retired and the wages component of this total value is very small resulting in allowable deduction of next to nothing. My deduction would not be limited at all if included in the total value on line 11 is my income from the rental property. It is the following wording from the instructions from form 4562 that leads me to believe I can include the income from SCH E line 3 while excluding the SEC179 dep expense as well as the other operation expenses.
"computed without regard to any section 179 expense deduction, the deduction for one-half of self-employment taxes under section 164(f), or any net operating loss deduction".
If this were the case then this loss would increase my allowable deduction and further reduce my AGI. My AGI would not be negative because I have capital gains. I was able to drill down in the Turbotax Depr Options sheet, Federal SEC179 section and add this assumed income component on line 3b. This made the values work out in my favor, right or wrong I'm not sure. Definitely a bit confusing which is why I reached out for help but at least I don't have to worry about that now because I'm definitely not qualified as a trade or business.
Thanks again for your input
