MLP QBI, Item 20Z and Turbotax

Forum|Forum|1 year ago
September 9, 2024
2 replies
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Hi, all.

I’m wondering something about QBI income for PTPs. I’ve noticed that the QBI amount shown in item 20Z on some of my K-1s doesn’t always equal the total PTP income (ordinary business income, net rental income, other income, 1231 income, etc.). I don’t entirely understand this. Specifically, Turbotax asks for these items below.

I don’t usually get a Statement A, so I’ve been just entering the numbers shown on the regular K-1 for these items. But when these don’t total to the 20Z amount, should I be doing this? If not, what should I enter on this screen, absent any other breakdown of what constitutes the 20Z amount?

For example, in one MLP I own, I have just $50 of Section 199A PTP Income, but $447 in ordinary business income and $217 in 1231 gain. I don’t know what accounts for the discrepancy. Would entering $447 and $217 in the fields above be incorrect?

Thanks for any help, especially @nexchap and @Mike9241.

Anonymous_

Employee

No text available

Mike9241

I can't see the full k-1 and any supplemental schedule for line 20. what I would do is use the k-1 numbers exactly as presented. after entering line 20Z later on in the app it will ask for the qbi info, I would use what's on 20Z even though it is not the same as the ordinary income and 1231 gain. read the cover letter with the K-1. maybe there's an explanation or call the number on this website for a possible explanation

https://www.taxpackagesupport.com/plainsallamerican

Rick19744

Employee

MLP K-1's are complicated and without being able to read all of the details that are typically provided along with the K-1, it is hard to respond to your specific question.

Section 1231 gain, in general, is taxpayer favorable and treated as capital gain. As a result, is not included in QBI. However, if there is Section 1231 recapture as a result of prior Section 1231 losses, then the Section 1231 gain, which is generally capital gain, is recharacterized as ordinary income and is included in QBI.

As a result, I concur with @Mike9241 and just input based on what you have even though you can't reconcile any difference. You just need to rely on the premise that the preparer of the K-1 understood the complexities and what is presented is correct. These K-1's are typically prepared by top accounting firms that know what they are doing; although they do get amended from time to time.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.