DAIRY FARMERS AND QBI

[Marie]

DAIRY SELLS THEIR MILK TO DAIRY FARMERS OF AMERICA COOP.  IF THEIR INCOME IS UNDER THE THRESHOLD DOES THE ADJUSTMENT CALCULATION NEED TO BE MADE?  DFA IS PASSING ON A DPAD.  CAN I USE THAT AND THE QBID?

[DANRVAN]

21 hours ago, Marie said:

DFA IS PASSING ON A DPAD.  CAN I USE THAT AND THE QBID?

Not sure what you are asking, can't use both DPAD and QBID that I know of.  DPAD is gone.

 

[Marie]

I THOUGHT, TOO, BUT, THE 1099 ISSUED BY DFA HAS DPAD AMOUNT ON IT.  WOULD LIKE TO FIND INFORMATION ON FIGURING DAIRY FARMS QBID

[WITAXLADY]

dpad is not gone from a cooperative as they are on 2017 actually - it goes on a Schedule -

Schedule 1, Line 36. Add lines 23 through 35. The domestic production activities deduction (DPAD), for various trade or business activities conducted in the U.S., has been repealed for tax years beginning in 2018 or later. However, partners etc. of fiscal-year pass-through entities that have DPAD generated in a tax year beginning on or before Dec. 31, 2017 should enter their share of the entity’s DPAD on the dotted line next to line 36, identify it as “DPAD,” and include that amount on line 36.

[WITAXLADY]

also cannot take both DPAD and QBI

[Marie]

So, on my milkers I have to chose between dpad or qbi.  I'm still looking for a good resource on dairies selling to coop, how to figure .  most milkers raise calves, crops etc.  How do I adjust expenses between the coop income and other.  Maybe I've got this wrong, I've read so much, I am very confused.

[DANRVAN]

So COOP has a fiscal year beginning in 2017, for example July 1 2017 and ending on June 30 2018.  Assume farmer sold $800,000 of milk in 2018,  $400,000 before and after July 1.  So coop is including DPAD on 1099 PATR based on fiscal year milk purchased from farmer including $400,000 in 2018?  Will coop also elect to include milk sales for purposes of 199-A for year ending 6/30/2019?  If not, then I believe farmer could include the remaining $400,000 as QBI for 2018 and include related deductions determined under a "reasonable method."

In regards to the calf sales and other income unrelated to coop sales, you would include as QBI and also allocate deductions related to those activities as determined by a 'reasonable method".