Question

What is a "Real Estate Enterprise group"?

Forum|Forum|5 years ago
February 14, 2021
2 replies
0 views

This is an error on my schedule E worksheet. It says I need a group number and that needs additional properties added to it. How do I fix this? I tried the instructions, but it is not that simple. No matter what I do this error keeps haunting me and not letting me file.

TurboTax Self Employed Online

JohnB5677

I think you're referring to an Enterprise Zone.

Enterprise zones are designated areas of land in which businesses can receive tax incentives in the form of tax exemptions on eligible new investment, when the investment is made in conjunction with a project that includes job creation.

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G

Grimloktt

I do not believe the poster is asking about zone. I, too, just received the same error message. It states, "Schedule E Worksheet: Real Estate Enterprise Group Number - Real Estate Enterprise #1 needs additional properties on it. Add additional properties to Statement #1 or change which Statement this property is report on."

Then, it says "Real Estate ent group _______".

Thoughts?

C

Cynthiad66

This has to do with the Qualified Business Income (QBI) deduction

Under the proposed safe harbor, a “rental real estate enterprise” would be treated as a trade or business for purposes of Sec. 199A if at least 250 hours of services are performed each tax year with respect to the enterprise. The IRS says this includes services performed by owners, employees, and independent contractors and time spent on maintenance, repairs, rent collection, payment of expenses, provision of services to tenants, and efforts to rent the property. However, hours spent in the owner’s capacity as an investor, such as arranging financing, procuring property, reviewing financial statements or reports on operations, and traveling to and from the real estate will not be considered hours of service with respect to the enterprise.

A rental real estate enterprise is defined, for purposes of the safe harbor, as an interest in real property held for the production of rents. A rental real estate enterprise may consist of multiple properties. The interest must be held directly or through a disregarded entity. Taxpayers either must treat each property held for the production of rents as a separate enterprise or must treat all similar properties held for the production of rents as a single enterprise. Commercial and residential real estate cannot be combined in the same enterprise.

The proposed safe harbor would require that separate books and records be maintained for the rental real estate enterprise. Property leased under a triple net lease or used by the taxpayer (including an owner or beneficiary of a relevant passthrough entity) as a residence for any part of the year under Sec. 280A would not be eligible under the proposed safe harbor.

Per @VictoriaD75

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4

4SSparky

A rental real estate enterprise is a Safe Harbor defined by the IRS specifically with respect to QBI income deduction under 199A. For that purpose it is defined as "an interest in real property held to generate rental or lease income. It may consist of an interest in a single property or interests in multiple properties.) Note that Commercial and Residential cannot be combined within the same enterprise. https://www.irs.gov/newsroom/irs-finalizes-safe-harbor-to-allow-rental-real-estate-to-qualify-as-a-business-for-qualified-business-income-deduction
More to your question, if you are choosing to use the Safe Harbor and meet the full qualifications you must assign an enterprise for each property you wish to include. If for example you were combining all your commercial properties into enterprise #1 you would enter a 1 in the RRE# box ( it is basically the same as entering an Aggregation Code.) In fact if you have entered an Aggregation code and now wish to create a RRE you will need to remove it from the 199A worksheet and enter it on the RRE Statement instead. Gotta love the TCJA.