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    EIC was denied because ct rented a lot?

    crichardson552
    Level 2
    ‎12-07-2019 03:40 AM

    Have talked to IRS and they said the rental of the lot was investment income and 

    EIC was denied. Intuit has the EIC included in the return. Refund was taken off

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    1 Solution

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    abctax55
    Level 15
    ‎12-07-2019 03:40 AM

    Do you have it tagged as land? Land rentals get treated differently, for some reason.  Lacerte gives the ability to select the type of rental, and I remember some diagnostics when "land" is selected.

    "*******Tax software is no substitute for a professional tax preparer*******
    ( Generic Comment )"

    View solution in original post

    16 Comments 16
    Just-Lisa-Now-
    Level 15
    Level 15
    ‎12-07-2019 03:40 AM
    Where did the lot rental get included?  On Sch E?

    ♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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    crichardson552
    Level 2
    ‎12-07-2019 03:40 AM
    Schedule e
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    Just-Lisa-Now-
    Level 15
    Level 15
    ‎12-07-2019 03:40 AM
    I feel like I saw someone in the Facebook ProSeries group a few weeks ago that had a similar situation, the software wasn't counting rental income as investment income and IRS disallowed their EIC.

    I don't think Ive had any clients with rental income that also qualify for EIC....I'll be sure to be on the lookout ofr that now though.

    ♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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    Ernie
    Level 9
    ‎12-07-2019 03:40 AM
    Is this a problem that should be reported to development?
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    Just-Lisa-Now-
    Level 15
    Level 15
    ‎12-07-2019 03:40 AM
    That's what Im wondering too....

    ♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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    Just-Lisa-Now-
    Level 15
    Level 15
    ‎12-07-2019 03:40 AM
    I cant even think of a client I might have that would fall into this situation for me to go look at their return, without having to make a bunch of "what if" changes to it.

    ♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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    Just-Lisa-Now-
    Level 15
    Level 15
    ‎12-07-2019 03:40 AM
    OK, I found one    Gave 6000 in W2 and 3900 on Sch E, single family home...no EIC computed.
    BUT if I switch the Sch E to be LAND, not a single family home, then EIC does compute.
    (self rental property type also allows EIC)

    I guess the question is...is that correct?

    ♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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    abctax55
    Level 15
    ‎12-07-2019 03:40 AM

    Do you have it tagged as land? Land rentals get treated differently, for some reason.  Lacerte gives the ability to select the type of rental, and I remember some diagnostics when "land" is selected.

    "*******Tax software is no substitute for a professional tax preparer*******
    ( Generic Comment )"
    TaxGuyBill
    Level 15
    ‎12-07-2019 03:40 AM
    Even then, it should be disqualified investment income.

    §32 disqualifies (1) "rents or royalties not derived in the ordinary course of a trade or business", AND (2) passive activity income.

    Rental of land is non-passive, so it would avoid that.  But it would still likely be "rents or royalties not derived in the ordinary course of a trade or business".
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    abctax55
    Level 15
    ‎12-07-2019 03:40 AM
    :+1:
    I vaguely remember a thread on this several years ago.
    "*******Tax software is no substitute for a professional tax preparer*******
    ( Generic Comment )"
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    Just-Lisa-Now-
    Level 15
    Level 15
    ‎12-07-2019 03:40 AM
    But if the rental qualifies for QBI as a trade or business, would EIC still consider it investment income?

    ♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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    abctax55
    Level 15
    ‎12-07-2019 03:40 AM
    Arggggggghhhhh   -  don't go there 🙂
    I wouldn't think it would matter; a rental deemed a ToB for 199A doesn't trigger SE tax.
    BUT - who the hell knows right now?????
    "*******Tax software is no substitute for a professional tax preparer*******
    ( Generic Comment )"
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    Just-Lisa-Now-
    Level 15
    Level 15
    ‎12-07-2019 03:40 AM
    LOL

    ♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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    TaxGuyBill
    Level 15
    ‎12-07-2019 03:40 AM
    Hypothetically, if it qualified as a Trade or Business it would not be investment income.

    However, I don't see how rental of LAND can have 'regular and continuous' activity to rise to the level of a Trade or Business.
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    abctax55
    Level 15
    ‎12-07-2019 03:40 AM

    From three years ago, FWIW.

    https://accountants-community.intuit.com/questions/1356896-land-rent-and-eic

    "*******Tax software is no substitute for a professional tax preparer*******
    ( Generic Comment )"
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    TaxLady8
    Level 1
    ‎04-22-2021 04:38 PM

    I am researching if land rent is part of investment income because of eic as well. I cannot get this link to go anywhere. Do you have any recollection what it was about. I know that is asking a lot to remember that long ago. 

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