Section 199A Dividends

[Donna1]

I read in another post how to enter the Section 199A Dividends that are on the Form 1099-DIV. In that post I asked the question: Just because ProSeries allows us to enter them, does that mean they qualify for the QBI deduction. If you input them, the deduction is calculated. But is this correct? No one answered that question so I am putting it forth again. Can anyone direct me to where I can research and document the legitimacy of taking or not taking this deduction? Thank you.

[sjrcpa]

IRC Section 199A and the Regulations thereunder.

[Donna1]

Found this on the IRS Web Site: Further question - how do you know if the amount that is on the 1099-DIV meets all the qualifications to be able to take the deduction?

Q26. I received a REIT dividend either directly or through a regulated investment company (RIC), reported as a section 199A dividend in box 5 of Form 1099-DIV. Is this amount eligible for the QBI deduction?

A26. Box 5 of Form 1099-DIV is used by REITs and RICs to report amounts that may be eligible for the QBI deduction, but some amounts reported in box 5 may be ineligible for the deduction.

Ineligible dividends include those for which the taxpayer did not meet holding period requirements for REIT or RIC stock. The QBI deduction may not be taken for any dividend reported in box 5 for dividend received on a share of REIT or RIC stock that is held for 45 days or less during the 91-day period beginning on the date that is 45 days before the date on which such share became ex-dividend with respect to the dividend. When counting the number of days the stock is held, include the day the stock is disposed of but not the day the stock is acquired. Also, don't count days during which the risk of loss was diminished. Specifically, don't count any day during which any of the following conditions are met:

1. The taxpayer had an option to sell, was under a contractual obligation to sell, or entered into (and not closed) a short sale of substantially identical stock or securities.
2. The taxpayer was a grantor (writer) of an option to buy substantially identical stock or securities.
3. The taxpayer's risk of loss was diminished by holding one or more other positions in substantially similar or related property.

In addition, the deduction may not be taken for any dividend on shares of REIT or RIC stock reported in box 5 to the extent the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property.