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Level 15

1099 to cut the grass?

That Nolo website lacks clarity on one front, (not all related to the OPs question) and is most likely wrong on another front.

The requirements to qualify as a business for the QBI deduction are not the same as the requirements to qualify as a SCH C business.

A rental property reported on SCH E can still qualify for QBI without being required to be reported on SCH C.

For a SCH E rental property, start up expenses are not allowed. The issue is, that is not made clear in IRS Pub 527. The thing is with this, is that  start up expenses are clearly covered in IRS Pub 535 for a SCH C business (Chapters 7 & 8). But they are not addressed at all in IRS Pub 527 for a rental. Therefore, it is implied (however sketchy that implication may be) that start up expenses for residential rental real estate reported on SCH E are not a valid rental expense.

This issue has been addressed in years past. I do know some have deducted rental property start up costs on SCH E as "other expense" even when advised not to. So far, I've not seen or heard of any lash back from the IRS on this and to date I've not seen any tax court challenges or rulings either.

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