For starters, long term residential rental income is reported on SCH E as a part of the personal 1040 tax return no matter what. Doesn't matter if the return is a joint return either. So if the rental is owned my a single member LLC, not one single penny of rental income or expense is reported on SCH C. THere are no exceptions for long term residential rental real estate. Keep in mind that a single member LLC is a disregarded entity too. So if rental property is the only thing owned by the single member LLC, then a SCH C will not be completed "at all" on the tax return.
If the property is owned by a multi-member LLC, then all rental income/expenses is reported on IRS Form 8825 as a part of the 1065-partnership return. The partnership then issues a K-1 to each partner, which they will need to complete their individual 1040 tax returns. All information from the K-1 concerning the rental ends up on page 2 of the SCH E that is a part of their personal 1040 tax return.
My questions is regarding Depreciation expense
You are required by federal law to depreciate rental property. To enter the data correctly and confirm it's correct, you need a few forms from the 2018 tax return.
For depreciation you need the two IRS Form 4562's from the 2018 return. The two I"m referring to print in landscape format. One is title "Depreciation and Amortization Report" and the other is "Alternative Minimum Tax Depreciation". More than likely, you only need the first one I named. The 2nd one comes into play if their income is over a certain threshold.
Do you have these two forms? Without them, you can't continue. The CPA is obligated to provide them. So if you don't have them, contact the CPA to get them. It would not be unreasonable this late, for them to charge a small fee either.
Another form you need from the 2018 return is IRS Form 8582. This shows the passive loss carry overs. While it's possible this form would not be present in the 2018 return, it is highly unlikely. At tax time it is common for rental property to show ever increasing losses with each passing year, and those losses are shown on the 8582. So I would expect you to be selecting the option to indicate that you do have carry over losses from a prior year. So when the program asks for your carry over loss amount, you get that from the 2018 form 8582.
Again, this form should be included in the 2018 package. If it's not, then you can get it from the CPA.
Without the 2018 forms 4562's and 8582, there is no way to do this "correctly" for 2019 and no way to prove you are correct if audited on it.
For the QBI, while it's possible, if you only own one single rental property I seriously doubt you qualify for the 20% QBI deduction. One of the many requirements to qualify for that deduction is that you spend a minimum of 250 hours a year directly involved in the management/upkeep of the property. Now I myself have three rentals, and with all three combined I can't even exceed 100 hours in a tax year. So while it may be possible for you, I seriously doubt you spend more than 250 hours in a tax year directly involved in the management and upkeep of only one single rental property.
The BradyWare website at https://www.bradyware.com/qbi-deduction-rental-real-estate/ has a pretty good explanation of things concerning QBI for rental property that's in plain English and interprets the law as written pretty darn good. Generally I don't recommend non-official websites when referring to federal laws. But this website does the best job I"ve seen so far, in it's interpretation of the actual law on this.
