How do you get ProSeries to deduct section 179 when calculating QBI?

[tonycpa]

How do you get ProSeries to deduct section 179 when calculating QBI?

My specific example regarding an S Corp K-1:

Ordinary income = 100,000

Section 179 = 50,000

Proseries calculation of QBI ignores the Section 179 and calcualtes at ord 100,000, ignores Section 179 x 20% = 20,000 QBI Deduction

Should be Ordinary 100,000 - Section 179 50,000 = 50,000 QBI x 20% = 10,000 QBI Deduction

What is the best way to handle this?

When is an update addressing this issue coming?

[Kathi_at_Intuit]

I have removed your duplicate post.

[Ernie · Accepted solution]

I am not sure S-Corps are ready for QBI yet but the partnership I worked on did the deduction automatically.  Walk through the QBI worksheets on the client return.  That is where it handles the SEC 179.

[rbynaker]

I'm not even sure how to calculate this at this point.  Say I have an S Corp that pays me $100K in wages, passes thru $4K of income on the K-1 and a $10K S179 deduction.  What's my QBI?

(a) $4K
(b) $0
(c) $6K QBI loss carryover
(d) None of the above

Keep in mind, the $10K is allowed to create a "loss" on the business because the owner's wages are factored into the calculation.  Or we can simplify it some and go with this one:  S Corp pays me $100K in wages, has $0 income on the K-1 and $10K S179 deduction.  Is QBI $0 or -$10K?  The law of unintended consequences...

Another question I've seen on other forums, what about SEHI from an S Corp?  SEHI is already effectively deducted from the S Corp income by virtue of the fact that it's included in the W-2 wages of the owner.  But QBI regs seem to suggest we might need to deduct it again as "effectively connected" to the K-1 income, which may be $0.

Are we having fun yet?

[garman22]

Good one, Rick. I would assume (b) as I am applying my 179 to income which brings my pass thru to $0. So there would be no QBI.

[rbynaker]

That's currently the Drake approach.  Deductions offset to the extent of QBI but do not create a QBI loss.  I don't know if that's the right answer, but it's something.  <shrug>  Then try to throw in aggregation and my head just explodes.

[garman22]

Im not sure off the top of my head. If you apply the remaining 179, arent you applying to W-2?

[rbynaker]

Your guess is as good as mine.  That would seem logical, but since when has logic been a requirement for tax laws?

[garman22]

LOL!! amen to that my friend. This will be a goofy year. I wish they'd roll back to the old tax laws.