Got a check entry in schedule E:QBI worksheet to report if qualified business, this is a rental property, my Single LLC is making payments to 1 employee. I have 2 rentals

[hernandezfo]

I am getting this check entry when I am running the final review, I have 2 rentals and I am only getting this error in one of them. I tried to remove QBI for the property and add it back, but I am still getting the same check this entry when I am running the final review. Any ideas? Thanks

[PatriciaV]

Please clarify the actual message you receive for QBI during Final Review.

[hernandezfo]

@PatriciaV , thanks for taking a look at this, please see attached image with the message 

Message says: Schedule E Worksheet (Property name): Link to QBI Wksht must be entered: Look at the item A2

Note: I have another rental and it is not failing, I generated a final taxes report and for the another property and the missing value is populated there (it is the business name), I put the value in the box for this property and I get the same message.

[RobertB4444]

Did you try double clicking the space in order to link it?  That works in my software.

[hernandezfo]

Thank for your answer @RobertB4444 , I have tried both clicking or double clicking. neither work

[PatriciaV]

You might review the QBI questions for each property to see what you entered on the page "Name and Employer ID number for this rental." Your business name should be different for each property, even if you simply add a number after the name. Ex: Rental1, Rental2. Note that QBI questions appear after you click Done from the Rental Property summary page.

Then run Final Review again to see if the message has been resolved. If not, you should be able to find the QBI worksheet that will link to each property.

[hernandezfo]

Thanks @PatriciaV for replying,  I am using a single-member LLC to manage both properties, I am the owner of the properties and the LLC. I am putting the LLC Name and ID number (LLC EIN) in both properties for that reason. I am splitting the employee salary (I only have one employee, that is not me) and LLC expenses between both properties to do not charge the them to one property only, is this the right approach?. You mentioned that the Entity name should be different.

Thanks again for your help.

[DaveF1006]

Splitting shared expenses is usually the right move, but there are some details to keep in mind when reporting them to the IRS and protecting your corporate veil.

When one LLC manages multiple assets, you want to see the true profitability of each property. This is called Internal Fund Accounting.

1. The Approach: If your employee spends 50% of their time on Property A and 50% on Property B, splitting the salary 50/50 on your internal ledger is the most accurate way to measure performance.
2. The Benefit: If you ever decide to sell one property, having clean, property-specific profit and loss (P&L) statements makes the asset much more attractive to buyers.

2. The Tax Reality (Form 1040, Schedule E)

Since you are a single-member LLC, the IRS considers you a "disregarded entity." This means the LLC doesn’t pay its own income taxes; everything flows through to your personal return.

1. Reporting: On your tax return, you will likely fill out a separate Schedule E for each property.
2. You will take that "split" salary and those shared expenses and list them proportionately under each property. As long as the total matches your 1099s and receipts, you are following standard procedure.

3. Addressing the "Different Entity Name" Comment

The advice you received about different names likely refers to Asset Protection, rather than just accounting.

1. Current Setup. One LLC owns/manages both Property A and B. The risk level is higher in this instance because  A lawsuit involving Property A could potentially reach the equity in Property B because they are under the same "umbrella."
2. Series LLC / Multiple LLCs. Property A is owned by LLC 1; Property B is owned by LLC 2. The risk level is lower because this "silos" the risks. A slip-and-fall at Property A generally cannot touch the assets of Property B.

4. Best Practices for Your Setup

To keep your "disregarded entity" status clean and maintain liability protection, follow these rules:

1. Don't Commingle: Never pay for personal groceries or your home rent out of the LLC bank account.
2. Document the Split: Keep a simple log or memo explaining why you split the expenses the way you did (e.g., "Expenses split 50/50 based on unit count").
3. Employee Filings: Ensure your LLC's EIN is the one used for payroll taxes (W-2s/941s), even if you are manually "splitting" the cost between the two properties in your software.

[hernandezfo]

Thanks @DaveF1006 for taking a look at this. I am already following your best practices recommendations (4).  About (3), I am working to create another entity for one of the properties to keep one LLC per property, but that will be done in a couple of months. About (2) (form 1040, Sched E), for some reason Turbo Tax is not allowing me to put the same entity in both rentals, because in the las one I put data in is generating the issue I posted. Any ideas why is this happening in Turbo Tax and how can I fix it?

Thanks again

[PatriciaV]

The name you enter under the QBI section of TurboTax is used on the QBI worksheet and Form 8995 but doesn't necessarily reflect the ownership of the property. Since each worksheet name must be unique (EIN can be the same), enter an identifier to the business name (Prop 1, Prop 2, etc.). This change should resolve the Smart Check message.

[hernandezfo]

Thanks @PatriciaV , I am checking to make the change and I am seeing the screen I captured below. Turbo Tax is asking for Single Member LLC Name and ID, I may need to do something like:

LLC Name + Property Name (this will make the name unique)

or

LLC Name + Property1 (for property 1)

LLC Name + Property2 (for property 2)

your thoughts?

Thanks again

[MarilynG1]

Either way you name the properties to designate them individually will suffice.  You could use the naming convention that makes it easiest for you to relate income/expenses, etc. to a particular property.

@hernandezfo 

[hernandezfo]

Thanks @MarilynG1 , unfortunately this approach is not working either, I updated Trade or business Name of both properties as LLC Name - Property name, but I am still getting the same message. I did something else to test, I removed the QBI from the property that is triggering the message and the message disappeared, then I added QBI back and left Business Name and ID blank (as there is no LLC related) and again I got the same error, the only difference is that my name appears in Trade or Business name and Trade or Business Id is empty on the screen. I believe this is TurboT defect or something like that