Rental Real Estate & 199A Deduction

[Lauren]

How do I tell Proseries that a rental real estate activity is not qualified for the 199A deduction?  I'm working in partnerships now but expect to have the same issue in 1040s.

[Kathi_at_Intuit · Accepted solution]

Please take a look a tthis article as it will assist with iput for a 1040 return:

ProSeries Simplified Worksheet Section 199A - Qualified Business Income Deduction

https://accountants-community.intuit.com/articles/1786756-proseries-simplified-worksheet-section-199...

For the 1065 there is no checkbox to state whether or not it is a qualified trade or business. An adjusting entry would have to be made. In the Partnership return from the Open Forms menu (F6), type 199a to select the Section 199A Activity Worksheet. In the 199a Activity Worksheet, line 1b enter the amount that needs to be adjusted.

 

[Lauren]

A check box needs to be added.  I can adjust the Qualified Business Income to zero but the program still reports 199A amounts on Schedule K-1 and attaches schedules.  This not only wastes paper and ink but confuses the clients.

[MrMojo]

Tax Cuts and Jobs Act, Provision 11011 Section 199A - Qualified Business Income Deduction FAQs _ Internal Revenue Service.

Q3. How do S corporations and partnerships handle the deduction?
A3. S corporations and partnerships are generally not taxpayers and cannot take the deduction
themselves. However, all S corporations and partnerships report each shareholder’s or partner’s
share of QBI, W-2 wages, UBIA of qualified property, qualified REIT dividends and qualified PTP
income on Schedule K-1 so the "shareholders or partners" may determine their deduction.

QBID is determined on the K-1 recipient level.

[Birmingham]

So does a passive limited partner get to take the QBID based on the information in Box 20 of the K-1? Is your answer different if it is a real estate partnership in light of the new final regs?