Question

Is it ok to aggregate a property for QBID which was not aggregated earlier? For example if I bought C in 2020 but did not aggregate then, is it ok aggrgate it for 2021.

Forum|Forum|4 years ago
April 19, 2022
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I have been aggregating multiple propeties for QBID, but the one I bought in 2020 I did not aggregate in 2020 on the main return. I understand aggregation cannot be amended. I am aware disaggregation is generally troublesome, but aggregatiing previously separate property, I am not sure. Is there a rule that a property can only be aggregated in the year of purchase? Thanks!

For example - property A,B were aggregated for 2019 and 2020. C was purchased in 2020 but was not aggregated in 2020 with A,B. Is it ok to to aggregate C with A,B for 2021 given that all rules of aggregation are satisfied?

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DawnC

Employee

No, there is no rule that says you can only aggregate in the year of purchase. Once an aggregation election has been made, it must be followed consistently in all subsequent tax years unless a significant change in facts and circumstances causes the prior aggregation to no longer qualify under the criteria above. Presumably, the disposition of a trade or business would be considered a significant change in facts and circumstances, since it would guarantee violation of the second criterion above, that common ownership exists for the majority of the tax year, including the final day of the tax year (Regs. Sec. 1.199A-4(b)(1)(ii)). The final regulations also provide that when the prior aggregation no longer qualifies due to a significant change in facts and circumstances, the individual or RPE is required to reapply the aggregation rules and determine a new permissible aggregation, if any. Individuals and RPEs are allowed to add newly created or newly acquired trades or businesses to an existing aggregation group, assuming all applicable criteria are met.

From - The Tax Adviser - 199A and Aggregation - detailed discussion of QBI aggregation with trades, businesses, or RPEs (rental property enterprises)

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N

nirbheeAuthor

Hi,

Thanks for the reply.

I have a follow up question -

In the Qualified Business Income Component Worksheet there is seciton for question -

"Has this trade or business aggregation changed from the prior year ? Thi includes changes due to a trade or business being formed, acquired, disposed or ceasing operations. If yes, explain"

In the case when I am aggregating an already purchased property as explained above, should I answer as "YES" and add some explanantion, OR this is only for when we disaggregate and answer should be "NO"?

Thanks for your help!