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Confused with QBI pass through from Partnership to S-Corp to shareholder

Forum|Forum|3 years ago
February 27, 2023
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I own 100% of an LLC that owns 40% of a Partnership. The Partnership K-1 from the 1065 has QBI on line 20 which I entered into TurboTax return for the LLC (S-Corp). This is the same number as line 1 on the K-1. The K-1 from the 1120-S return for me is not including the Partnership income in the number in line 17. It is only showing OBI from company income and expenses and doesn't add in the income brought over from the partnership. I thought this was supposed to transfer. Any help is appreciated as next year the LLC will solely have K-1 income from the partnership.

Thanks,

TurboTax Business Windows

Best answer by AliciaP1

If you did not mark the Section B1 box when you entered the K-1 into the S-Corp return (at the bottom of the list of boxes on the Identify Boxes That Have Value screen, the QBI income of the partnership will not populate on your Statement A from the S-Corp.

To correct your Partnership QBI for your S-Corp you can follow these steps in TurboTax Business:

Within your return under the Federal Taxes tab and Income, scroll down to K-1s received and click Update
Continue or click Edit until you get to the Identify Boxes That Have Value screen and mark the bottom box, Section B1 (Qualified Business Income Deduction)
Continue and enter the information from the Partnership Statement A on the Enter Qualified Business Income Deduction Information screen

@dlozier

M

Mike9241

did you read the 1120-S instructions for line 5 on page 14. where to enter depends on what the partnership does and what lines have amounts. for the QBI info read the instructions on page 38

https://www.irs.gov/pub/irs-pdf/i1120s.pdf

D

dlozierAuthor

Yes, I think I understand all of that correctly and the QBI should pass through the S-Corp.

AliciaP1Answer

If you did not mark the Section B1 box when you entered the K-1 into the S-Corp return (at the bottom of the list of boxes on the Identify Boxes That Have Value screen, the QBI income of the partnership will not populate on your Statement A from the S-Corp.

To correct your Partnership QBI for your S-Corp you can follow these steps in TurboTax Business:

Within your return under the Federal Taxes tab and Income, scroll down to K-1s received and click Update
Continue or click Edit until you get to the Identify Boxes That Have Value screen and mark the bottom box, Section B1 (Qualified Business Income Deduction)
Continue and enter the information from the Partnership Statement A on the Enter Qualified Business Income Deduction Information screen

@dlozier

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PatriciaV

Employee

What code was given for Box 20? Did you also receive additional information for Section A (QBI)?

As Mike9241 mentioned, you need to complete Section A of the Schedule K-1 entry in order for any QBI to flow through your S-Corp to your K-1 and be reported on Statement A.

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D

dlozierAuthor

The partnership K-1 has code Z in box 20 and the QBI section (Ordinary Business Income) on Statement A has the same value as shown in Box 1 of the K-1. I enter this into TTAX business for the S-Corp. The K-1 for the S-Corp has a V in Box 17 and Statement A shows W-2 wages and a very small number in Ordinary Business Income. Box 1 of the K-1 has the S-Corp Ordinary Business income from the 1120-S line21. That number is way larger than the QBI on Statement A and it appears the QBI from the partnership is not showing up.