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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

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.

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