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D
dk603
April 16, 2023
Question

Acting as my own general contractor and have it set up as a business. Does QBI apply?

  • April 16, 2023
  • 1 reply
  • 0 views
I have a business set up for a self-build. Acting as my own general contractor and in some cases, as the contractor itself. I have no intention making a profit off myself. Does my business qualify under QBI rules?

1 reply

S
ShirlynW
April 17, 2023

No. Your business does not qualify under QBI rules. Since you have no intentions of making a profit, the IRS defines your activity as a hobby and not a business.

 

The IRS states, "a hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. People operate a business with the intention of making a profit." 

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D
dk603Author
April 17, 2023

Ok. Then all business related expenses are not deductible then? If I plan on making a $1 profit then that would qualify as a business and QBI? In my case, QBI increases my tax burden for 2022 because it was operating as at a loss.

KrisD15
KrisD15
April 17, 2023

Are you saying that you set up a business in order to build your own personal residence? 

If yes, those expenses would be personal and not deductible as business expenses. 

(However you would be required to issue 1099-NEC to your sub-contractors since you are a business entity) 

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