Your supervisor asks you to look into some administrative interpretations/updates of asks the Qualified Business Income Deduction. Specifically, your supervisor is interested in the question of whether the QBI deduction may apply to a rental activity and, if so, what procedures, activities, etc. are necessary for landlord to qualify for the deduction. The request is prompted by some work your firm is doing for Robert and Catherin Tate, a retired couple who own and operate two small apartment buildings in the local area area. Summary tax results for the properties, from last years return, are listed below.

	112 Willow Street	422 2nd Avenue
Rents Received	$48,000	$86,400
Rental Expenses	23,900	33,400
Rental Profit or Loss	24,100	52,000

Although the couple does hire outside persons to assist with some of the repair, legal, and accounting issues, the couple actively manage and work on these properties. Estimated hours performed by Robert and Catherine last year are listed below.

	112 Willow Street	422 2nd Avenue
Hours worked by Robert	140	260
Hours worked by Catherine	40	10

Required:

Research the question posed by the supervisor above and, if the taxpayers qualify for the deduction, advise them what steps may be necessary to qualify and continue to qualify for this deduction. Your firm has other taxpayers who are small landlords so your research and advice may be used for multiple clients.