QBI and Solo 401K Implications

[Bob Ebaugh]

I'm struggling with interpreting the QBI rules and was hoping to get some comments on if there is any correlation to Solo K properties.

We actively "manage" residential rentals we personally own and others held in trust by our Solo 401K.   However, the majority of the combined portfolio is part of the 401K.   All finances are separated books and bank accounts, no worries there.   But practically speaking the day to day activities all get handled the same way.   We don't do repairs or improvements, that is handed by contractors across the board.  But we advertise, do the leasing, and are always the first point of contact for our tenants.

Just looking at the personally owned properties, there isn't any way in good faith to justify the 250 hour safe harbor.   We just don't spend that much time on those 2 properties.   However, I would have no problem claiming we do essentially all the "work" for that operation that generates about 20K in income since its essentially unleveraged and claim the QBI anyway.

But then I look at the big picture and see all the rest of the 401K portfolio.   On the 401K side, by not doing repairs and improvements, or for that matter running the lawnmower, we are making the case these are passive retirement investments.

Wouldn't there be a conflict if we took QBI on the personal side since that requires either safe harbor, or a claim that the rentals are a business activity?