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K-1 1120-S QBI Question


GraceNY

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Shareholder has an interest in 2 profitable passive S-Corp's, will he qualify for the QBI deduction?

(1) Multi- Family Apartment Building  K-1 shows Net Rental Real Estate Income of 25k.  K-1, Box 17, Code V statement shows the rental income $25k, W-2 Wages 15k and UBIA of qualified property 75K. 

(2) Commercial Building K-1 shows Net Rental Income of $20k, K-1, Box 17, Code V shows the rental income of 20K and UBIA of qualified property of $2k.

When I enter this in ATX, it calculates a QBI deduction.

I am concerned about this because (1)  the shareholder does not materially participate in this entity, (2) the income is listed as passive and (3)  the K-1, box 17, Code V statements say "QBI items subject to shareholder-specific determination."

Thanks in advance for your input.

Grace

 

 

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1 hour ago, cbslee said:

Your client can delegate his participation to representative(s) or agent(s).

Your don't say what his ownership interest is or who is responsible for managing or delegating responsibilities?

NEI

 

 

I don't understand what you mean by "delegate his participation to representative(s) or agent(s)

Entity # 1  25% ownership and Entity #2 12.5% ownership

This is a family operation with his oldest brother being responsible for managing/delegating responsibilities.

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52 minutes ago, GraceNY said:

 

Entity # 1  25% ownership and Entity #2 12.5% ownership

This is a family operation with his oldest brother being responsible for managing/delegating responsibilities.

Taking QBI was be difficult to justify with this fact pattern.

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