ProVision, PLC

Are rental real estate activities eligible for the qualified business income (QBI) deduction? The answer is a distinct “maybe.” This tax break allows eligible sole proprietors and owners of “pass-through” entities to deduct up to 20% of QBI. Pass-through entities include partnerships, S corporations and most limited liability companies. However, income from a rental real estate activity is QBI only if the activity rises to the level of a trade or business or meets an IRS safe harbor, which generally requires separate records, sufficient rental services and specific documentation. Various limits and other restrictions also apply.

The U.S. Dept. of the Treasury announced that the IRS plans to modernize Form 990, Return of Organization Exempt from Income Tax. The information form is generally filed by nonprofits. The revised form would require tax-exempt organizations to provide clearer reporting on certain activities. The planned changes are intended to improve transparency to help detect misconduct and hold wrongdoers accountable. The Treasury and the IRS expect to publish proposed regulations and solicit public comment before finalizing any reporting changes. The agencies will consider administrative feasibility and reporting burden as the proposal is developed.

A landmark court ruling, Kwong v. United States, found that the IRS improperly assessed certain penalties and interest during the COVID-19 pandemic. If you were charged penalties or interest for missing tax filing or payment deadlines from Jan. 20, 2020, through July 10, 2023, you may be eligible for a refund or abatement. But further litigation is expected, and other courts could interpret the law differently. For affected taxpayers, filing a protective claim before July 10, 2026, is critical to preserving their rights while pending cases are resolved.

📣 WEBINAR ALERT - ProVision's Tax Talk Live
📅 May 6, 2026 — 10AM PT / 12PM CT
🎙️ Hosted by CPAs, Scott Snow and Deni Baldwin
Join this insightful webinar about - Strategies for Rental Investors: Financing, Tax Planning & Loss Optimization
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ProVision, PLC

Pass-through entities generally don’t owe federal income tax at the entity level, but they still must file federal income tax returns. These entities include partnerships, limited liability companies treated as partnerships for tax purposes and S corporations. If your pass-through entity uses the calendar year for tax purposes, as most do, the filing deadline for the 2025 tax year is March 16, 2026 (because March 15 is on a Sunday). The deadline can be extended to Sept. 15, 2026, by filing for an extension by March 16. If you do that, you (and any other owners) will also likely need to file an extension to Oct. 15, 2026, for your individual return.

📣 WEBINAR ALERT - ProVision's Tax Talk Live
📅 February 17, 2026 — 10AM PT / 12PM CT
🎙️ Hosted by CPAs, Timothy B. Gertz and Rebecca Phillips

Join this insightful webinar about depreciation - the ins and outs, from acquisition to sale.

🔗 Link to Register: https://bit.ly/4rvke4T

If you pay more than $10,000 in state and local taxes (SALT), such as property tax and state income tax, a 2025 tax law change could significantly reduce your federal income tax liability. For 2018–2024, the SALT itemized deduction was limited to $10,000. For 2025, you can deduct up to $40,000. But the deduction drops by 30% of the amount by which modified adjusted gross income (MAGI) exceeds $500,000; when MAGI reaches $600,000, the $10,000 cap applies. (Be aware that lower limits and thresholds apply to married taxpayers filing separately.) To maximize your deduction, you may want to take steps to keep your MAGI under the reduction threshold or accelerate property tax payments into 2025.