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jklcpa

QBI INFORMATION - Law Analysis and possible ATX entry tips

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Hi all, because we already have quite a few posts already with various scenarios and questions about entry of information related to QBI, the worksheet, entry in partnership returns flowing to the K-1s, etc, and because it seems that the same tips for data entry of information are being repeated throughout multiple topics containing specific scenarios that not all member would take the time to read, I thought it might be helpful to set up a pinned topic where the proper entries within ATX could be notated for easy reference.

Please post the entry tips or problem workarounds here in this topic.  Maybe include a heading for your post in capitals or bold for ease of use.

What NOT to post - please do not post questions about specific client situations, or pose questions here. That is what the separate topics are for.

If this is too narrow, if it should include other information, or needs a title change, please let me know.

 

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Populating the Activities tab in the Sec199A Wkst

ATX will show all activities (Sch C, Sch E, Sch F, 1065 K-1 Input, 1120 K-1 Input).  If you create an activity after adding the Sec 199A Wkst, the activity will be automatically added to the list.

For each activity, check Qualified Business if it qualifies to have QBI.  If the activity is also a specified service business, check the Service Business box as well as the Qualified Business Box.  The special limitations for specified service businesses will be applied on the QBI Deduction - Service tab before flowing to subsequent tabs.

For numbers to flow automatically from K-1 entries, the QBI-related lines on the K-1 input must be completed. For S Corporations, on Line 17, Code V is where QBI is entered, Code W for W-2 wages, and Code X for unadjusted basis.  You can enter them in either a service or non-service box.  If numbers are entered in the service boxes, it will flow the numbers to the Activities tab and check the Service Business box, but you also have to check the Qualified Business box for numbers to flow into the tabs where limitations are computed. If numbers are entered in the non-service boxes, it will flow the numbers to the Activities tab, but you have to check the Qualified Business box for numbers to flow into the computations.  For partnerships, the codes are on Line 20, Code Z is for QBI Income, Code AA is for W-2 wages, and Code AB is for unadjusted basis.

Schedule C QBI does not flow into the Activities tab, so you must supply the numbers yourself.  The regulations require the Schedule C net income to be reduced by deductions for 1/2 the SE tax, the SE health insurance deduction, and pension contributions made possible by the Schedule C net income.  Likewise, for S corporations and partnerships, the QBI that flows into the Activities tab may have to be reduced on the Activities tab by these deductions.

 

Adding Quote from "claycpa" here and hiding his post following this one because this is a NO CHAT topic:

Quote

I have keyed in the k1s for THREE 1040s on the k1 input sheet.  I have went into the 199a worksheet and marked the "qualified" box (although if the k1 has the entries entered in it, isn't it by definition qualified?).  NONE of my information has flowed through.  I have had to RE-ENTER the SAME code V, W and X information that I entered on the k1 input screen on the 199a worksheet screen.  It doesn't "flow automatically" from what I've seen.  

 

Edited by jklcpa
to consolidate posts
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I am going to recommend this webinar on 199a:  https://on-demand.compasstaxeducators.com/courses/sec-199a-with-final-regulations

 

Here is what it covers and I believe you get access to Q&A recording from the live webinar.

• Calculate the Sec:on 199A deduc:on for taxpayers
below the taxable income thresholds.
• Calculate the Sec:on 199A deduc:on for taxpayers
above the taxable income thresholds.
• Understand the key rules and defini:ons as outlined in
the final regula:ons and how they differ from the
proposed regula:ons, if applicable.
• Apply the Sec:on 199A rules to a variety of taxpayer
situa:ons to arrive at the correct deduc:on amount.
• Understand the tax planning implica:ons of Sec:on
199A and its final regula:ons.

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Treasury released corrected Section 199A regulations today.  In my view, the edits are very minor with no substantial changes to what we have been working with. If you have excess section 743(b) basis adjustments, you may want to review the changes to make sure you are applying the latest calculation method.

https://www.irs.gov/pub/irs-drop/td-reg-107892-18-corrected.pdf 

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