what happens if we do NOT send that form to a contractor and yet take the deductions on Shed E ?
As far as I know, nothing. But I'm not a tax pro by any stretch.
It used to be that the owner of a long tern residential rental property was not considered to be a "trade or business", and the 1099 was not required to be issued regardless of the amount. However, with the implementation of QBI, a rental property "could" qualify as a trade or business for the purpose of claiming the QBI deduction. So it becomes a grey area determining if the 1099 is required or not. So play it safe and issue the form. Especially if you are claiming QBI against any rental property.
