QBI and inactive partner

[Robert W Alcorn]

Jane is a partner in the family’s real estate partnership (an LLC taxed as a pship) operation that is truly in a Sec. 162 trade or business.

Jane however lives 100 miles from the town where this family rental operation is and Jane has absolutely nothing to do with the operations of the rental operations. Jane is a partner full-time in a law firm in a far away city.

The rental ops 2018 1065 K-1 came in to Jane and on Jane’s K-1 in Box 20 has all the QBI data.

Question: Since Jane is absolutely uninvolved with the operations of the rental pship, is Jane allowed to take a QBI deduction based on the data in Box 20,

OR is Jane not allowed to take a QBI deduction on this pship as Jane is totally uninvolved in the operations?

[itonewbie · Accepted solution]

Yes, it is allowed.  The preamble and explanation of the final regs made it clear that level of participation is not relevant for purposes of §199A.

[Robert W Alcorn]

Thank you!!

[itonewbie]

NP