199a: REIT income held in LLC

Dec 28, 2014
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This is a tough one. I have a client who holds all of his investments in an LLC (partnership taxation, F1065) for asset protection. On the F1065, the business activity is listed as investment management.

The LLC investments include publically traded REITs. The client wants to know if the REIT income would be considered QBI and afforded the 20% deduction.

I am not sure the regulations published in August address this issue. The regulations discuss investment management fees, but that is not the situation. The client does not pay himself and fees for managing his own investments. He wants to know if the 20% deduction will flow through the LLC to him.

Does anyone have any thoughts on this?

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