Randall

I'm getting two Schedules A when I print (ATX). One has the numbers and one has all blanks. Anyone else have this happening?

I'm not sure why it was loaded, but I assume it was in the 1120S return 'thinking' the S corp was a partner in a partnership and needed the K-1 input.

Working on a 1120S. On Sch K, clicked in the gray area and went to popup worksheet for 199A entries. In the column for service activities, there was another jump to arrow. When I clicked on it, ATX downloaded the individual 1040 K-1 input sheet into my 1120S return. But it was the K-1 input sheet for 1065, not 1120S. I don't know why I would have this in the 1120S return, even if it was the K-1 input sheet from 1120S. Anyone else experience this?

I didn't know IRS accepts in paper form, both on same page. It's still easier for me to see page two on a page two. And not having to explain to clients. Maybe it's just a mental thing.

I really don't want it. I like to print the forms as they officially are. I explain to the client the new forms and that the lower half is supposed to be blank. I'm still trying to get to know where everything is and what Schedule ties in where. Printing page 1 & 2 on the same page will only confuse me more.

I figured out how ATX is calculating the taxable portion of the repayment. But the 1120S K-1 basis statement will be off from the 1040 basis worksheet. The 1120S is showing the entire amount of the repayment reducing basis and the 1040 is only showing the nontaxable portion as reducing basis. Remaining loan basis is greater on the 1040 worksheet than on the 1120S basis statement. Is this difference something I am going to have to live with? What if they go to someone else in the future or I retire (not too far off). I would like the two to say the same thing.

Probably a good idea. For this one, I inherited it.

Wow, jklcpa. Thanks.

S Corp shareholder paid part of his shareholder loan back. Still has remaining loan basis. The 1120S K-1 basis statement shows the reduced loan basis. Loan basis was restored by profit. On the shareholder 1040 basis worksheet, part of the loan repayment is showing as reportable income. I can't determine why this doesn't match the 1120S basis statement and not show any part as taxable income. I seem to vaguely recall that loan repayment is considered done during the year while profit restores basis at the end of the year. Is this so and why ATX is calculating a part of the loan repayment as taxable? And if so, is there anywhere in ATX, I can see how this is calculated?

This topic is being discussed a lot on the TaxTalk group. There seems to be good reason to consider a rental activity a trade or business even if safe harbor is not met. I received my recent Tax Action Memo from Thomson Reuters today. Trade or Business per 162 was discussed and they referenced a number of cases. Gilford, Fackler, Murtaugh, Estate of Gibney and Legreide where court held a rental real estate activity was a trade or business. Grier, Jackson, Union National Bank of Troy where court held rental real estate activity was not a trade of business. The cases where was not held to be a trade or business had reasons that would not seem to apply to most small rental clients.

Thanks for the clarification. So is it safe to say most rentals with one or two houses would not meet the 162 level. Then they must meet the safe harbor rules. Can any of these small rental clients come up with 250 hours? That's over 20 hours a month, 5 hours a week.

cbslee, are you saying that you consider most of your rentals to be a trade of business regardless of the safe harbor rules? There has been a lot of discussion of the safe harbor rules, but even if someone doesn't meet the safe harbor rules, he may still be treated as a trade or business for purposes of QBI if it is a 162 trade or business. When I look at 162, there's no definition, just expenses that are necessary and ordinary and whatever. Are you saying most rentals would meet the 162 requirement? If so, why bother with safe harbor? And how would we document that we think the rental activity is a 162 trade or business?

I'm looking at Pub 535 2018, dated January 25, 2019. I don't see this on page 2. Are you quoting from a draft? Has it been included in the actual Pub 535? I do see this on page 50, left column under Chapter 12 - Qualified Business Income Deduction. The language in your 2nd part is slightly different.

And I don't think they can be carried over by surviving spouse. I know NOL can't, not sure about capital loss.

I have a similar situation, an LLC, two members, holding land. We never filed a 1065 for several years, then Ky contacted them. Since they were an LLC, Ky wanted that $175 fee every year. So I prepare the 1065 which flows to Ky 765. I told them to pay the property tax themselves so not to flow thru 1065. Land, no depreciation, no loss, no change in basis (at least inside basis).

Ky has it's separate form but the instructions say it accepts the Fed 8879.

I'm still wondering if I put this on 1065 page one or Form 8825. Instructions in 1065 say it's not a rental if it meets one of the exceptions (avg stay 7 days or less). From that, it looks like it goes on 1065 page one. Reg 1.469-1T(e)(3) also words it that it is not considered a rental activity if one of the exceptions apply. So it appears it should be on 1065 page one and Box 1 in Sch K-1. Form 8825 (and also K-1 input for 1040) has a place to mark the property type 3 for vacation and short term rentals. This sort of contradicts itself as to where to report.

Eric, you have got this 199A down pat. Have you been studying this all year long? Thanks for your comments.

I haven't gotten into this yet. But it sounds like a good work around within the software. Slightly off your topic, but I assume Buildings are included in the fixed assets number? If put into service within the last 10 years? Am I reading the time period correctly, the later of 10 years or depreciable time period. So a 7 year asset fully depreciated but placed in service 9 years age would be included? More to your situation, if the multiple rentals are on an LLC 1065, Form 8825, is the election to aggregate at the entity level? Just thinking ahead. I'll have one of these coming in and they have no mortgage interest and are generating nice profits.

Thanks Eric. This seems weird. I have a client with suspended losses. The S corp is turning a corner and will have profit in 2018. The individual has no basis in his share and his past losses have been suspended. For 2018 he will have a profit on his K-1. If I understand this correctly, he will not show this income as taxable (because his suspended losses will offset) but he can then use this 2018 income to calculate a QBI deduction (assuming all other things allow so). Is this correct?

I hope it doesn't happen. Enough changes already. Extenders are a joke. Make it the law, pass it with enough time to let IRS and software companies get it done. We don't need one year laws.

Eric, did you mean before 2018? I have been looking for something on this and can't see anything specific other than the current year loss carried forward to next year. However, I did see something on suspended losses that they retain their character and are treated as 'incurred' by the corp in the succeeding tax year with respect to that shareholder. That would lead me to believe that prior years suspended losses would be treated as incurred in the current year and offset any current year income from that activity and therefore reduce QBI for the current income. Do you have any quick reference regarding losses from prior years not counting against the current year income?

I put my Roth amount on 8606 and it flowed to 1040 correctly. With another client, there was no Roth, but pension money plus an IRA. I checked the IRA box on the 1099R input and it didn't show up on 4a, just 4b. Some of the pension money was nontaxable so 4b was greater than 4a, which didn't look right. I just unchecked the IRA box and the total gross flowed to 4a, taxable portion to 4b.

Do losses only begin counting this year? If K-1 shows income, would prior year loss apply toward QBI this year? I'm assuming at the 1040 level, if individual has PAL suspended loss, then that would offset current year income or basis limitation loss from prior year, that too would offset current year income for QBI purposes.

Exactly how much info do we put on the K-1 if we prepare the 1120S? I would think if income is QBI income, we note that but if there is 179 info (or SE income for 1065) on the K-1, it would seem the preparer of the 1040 (if not the same as 1120S preparer) would know that the QBI income would be reduced by the 179 amount before inputting into 1040 199A worksheet. Does the 1120S preparer have to include on the K-1 notes how to calculate all this if the info is there for the 1040 preparer?