Tax Disclaimer

What SheltrIQ Does

SheltrIQ automates calculations and classifications based on general IRS rules and the data you provide. Specifically:

• Expense classification: Suggests Schedule E line assignments using keyword rules and AI analysis. These are suggestions that you must verify.
• Repair vs. improvement (BAR test): Applies the IRS Betterment, Adaptation, Restoration test using keyword detection and AI analysis. The IRS makes the final determination, not SheltrIQ.
• Depreciation calculations: Computes MACRS depreciation using standard IRS formulas (27.5-year residential, mid-month convention). Does not account for Section 179 elections, alternative depreciation system (ADS), or state-specific rules.
• QBI deduction (Section 199A): Estimates the 20% QBI deduction based on the safe harbor election. Does not account for all limitations (SSTB rules, aggregation elections, carryforward losses).
• Quarterly estimates: Projects federal tax liability using standard brackets. Does not account for state taxes, AMT, NIIT (Net Investment Income Tax), or self-employment tax.
• Audit risk scoring: Identifies common IRS audit triggers based on statistical patterns. This is not a guarantee of audit or non-audit.
• Tax health score: A general wellness indicator based on common deduction opportunities. Not a measure of tax return accuracy or compliance.

What SheltrIQ Does NOT Do

• File tax returns or any forms with the IRS or state tax agencies
• Provide individualized tax advice based on your complete financial situation
• Account for state income tax rules, local taxes, or foreign tax implications
• Guarantee the accuracy of AI-generated classifications or calculations
• Provide legal advice regarding entity structure, asset protection, or estate planning
• Replace the judgment of a qualified CPA, Enrolled Agent, or tax attorney
• Represent you before the IRS or any tax authority
• Guarantee protection from IRS audits, penalties, or interest

AI Limitations

SheltrIQ uses artificial intelligence for expense classification and document analysis. You should be aware of these limitations:

• AI can be wrong. Language models make mistakes, especially with ambiguous transactions. A $5,000 expense described as "property work" could be a repair or an improvement — AI cannot determine this with certainty.
• AI does not understand context. The AI does not know your property's history, prior repairs, or your overall tax strategy. A "new water heater" is a capital improvement for a functioning property but may be a repair if replacing an emergency failure.
• Tax law changes. AI models may not immediately reflect new tax legislation, IRS rulings, or court decisions that change how deductions or classifications work.
• Garbage in, garbage out. If you enter incorrect data, the AI will produce incorrect classifications. Always verify your input data.

Your Responsibilities

• Review all AI classifications before using them for tax purposes
• Maintain your own records and receipts as required by the IRS
• Consult with a qualified tax professional for your specific situation
• Verify all calculations independently before filing tax returns
• Understand that you — not SheltrIQ — are responsible for the accuracy of your tax returns
• Keep records for the IRS-recommended retention period (generally 3-7 years)

When to Consult a Professional

We strongly recommend consulting a qualified CPA or tax professional if you:

• Are claiming Real Estate Professional Status (REPS)
• Are conducting a 1031 exchange
• Are considering a cost segregation study
• Have rental losses exceeding $25,000 (PAL limits)
• Own properties in multiple states
• Are evaluating entity structure changes (LLC, S-Corp, trust)
• Have a high audit risk score in SheltrIQ
• Are selling a rental property (depreciation recapture, capital gains)
• Have mixed-use properties (personal + rental)
• Are filing for the first time with rental income

IRS Circular 230 Disclosure

To the extent that any content in SheltrIQ could be interpreted as tax advice (which is not our intent), please note: Pursuant to IRS Circular 230, any tax advice contained in this communication (including any attachments or outputs) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Specific Feature Disclaimers

1099-NEC Generation

SheltrIQ generates 1099-NEC PDF forms based on data you provide. You are responsible for verifying all information (vendor names, TINs, amounts) before distributing forms to contractors or filing with the IRS. SheltrIQ does not electronically file 1099 forms with the IRS. You must file separately using the IRS FIRE system or a qualified filing service.

Depreciation Schedules

Depreciation calculations use standard MACRS rates and the mid-month convention. These calculations may not account for: prior depreciation taken before using SheltrIQ, Section 179 elections, alternative depreciation system (ADS) requirements, or state-specific depreciation rules. Verify all depreciation with your CPA.

Cost Segregation Estimates

Cost segregation estimates are rough projections based on general industry ratios. An actual cost segregation study must be performed by a qualified engineering firm. Our estimates should be used only to evaluate whether a full study is worth pursuing.

Entity Structure Advisor

The entity structure advisor provides general educational information about LLCs, S-Corps, trusts, and other structures. Entity selection has significant legal, tax, and liability implications that require professional advice specific to your situation.

Audit Risk Assessment

The audit risk scorer identifies common statistical patterns associated with IRS audits. A low score does not guarantee you will not be audited. A high score does not mean you will be audited. The IRS selects returns for audit using proprietary algorithms that we cannot replicate.