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Updated almost 6 years ago,
For QBI - are 4 rental properties part of a combined business
When entering information on my Turbo Tax Premiere software I see a screen that asks the following: If this business shares common ownership and operates co-operatively with another business, you may want to report them as a combined business to allow the combined wages paid (I have none) and assets held by both businesses ( 4 rentals) to give you a higher overall deduction.
Factors that allow businesses to be combined
In order to be eligible to be combined, any businesses that are being combined must meet all of the following factors
1) The same person or group of people must own at least 50% of all businesses involved. This can include indirect ownership. For example, you directly own 40% of business ABC, and you also own 50% of an investment partnership that owns the other 60% of ABC. So directly you own 30% of ABC through the partnership (because you own 50% of 60%, which comes to, which comes out to 30%), which gives you total ownership of 70% (40% plus 30%).
2) The 50% ownership by the same people exists for the majority of the tax year.
3) The businesses operate on the same taxable year.
4) A Specified Service Trade or Business (SSTB) is not eligible to be combined with any other business, - and -
5) All of the combined businesses must meet at least two of the three following conditions:
- They provide products and services that are the same or customarily offered together. (For example, car washes are customarily offered at gas stations.
- They share facilities or share significant centralized business elements, such as personnel, accounting, legal, manufacturing, purchasing, human resources, or IT resources.
- They are operated in coordination with each other. (For example, a person owns a laundromat and people to make purchases at the cafe. While these aren't services that are customarily offered together, the owner operates them collaboratively. They are right next door to each other, and both businesses offer discounts to customers of the other business to encourage people to make purchases at the cafe while doing laundry.
Owning 4 rental properties - I think I meet factors 1 through 4 and the first two of 5. So thus I can combine the properties?
I welcome any feedback on this.
Dave