Determination of Qualified Business Income Credit

Forum|Forum|2 years ago
April 15, 2024
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Shouldn't TT include recapture of depreciation (which is ordinary income) as part of the QBI calculation for a publicly-traded partnership?

It doesn't appear to.

Other

Mike9241

that's a good question. here's what one K-1 sales summary says about ordinary income recapture (not all have this wording). " the amount reported as ordinary gain (column 7 on my sales schedule) is qualified PTP income for 199A and has not been included in the amount reported on schedule K-1, line 20Z." The inclusion is specifically provided for in IRC 199A(e)(4)(B). TurboTax has no way of knowing whether 20Z includes or excludes 20Z So it's up to the taxpayer to read what is stated in the cover letter or sales schedule. and look at 20z as compared to the various lines on the K-1. For example, in one case lines 1 through 3 totaled $1000 but 20z reported only $990. There was no explanation for the $10 difference and no combination of the other lines comes to $10 less. I haven't seen one where it appears the 751 gain was included but then I haven't seen every PTP K-1 with a disposition.

I wouldn't be surprised if many taxpayers didn't include the 751 gain as PTP income. I also wouldn't be surprised if many taxpayers omitted the 751 statement that is supposed to be included with their return. Since PDFs can't be attached such affected taxpayers using Turbotax and probably other apps couldn't e-file.

Turbotax and other apps, including professional apps, could easily include this with a simple checkbox on the K-1 worksheet.

Puzzled7Author

Thanks.

This is a pretty big issue, as recapture on a long-held PTP can be quite significant.

Do you know of any way to drill into TT to see how it calculates QBI? I opened up the forms and worksheet but that wasn't informative. Just had summary totals - unless there is another link that's lurking in there somewhere.

PatriciaV

Employee

For Schedule K-1, QBI calculations appear in Section D2 of the K-1 Partner worksheet, which does include many lines for adjustments to the reported income (loss). You may wish to review that section of the K-1 worksheet for the PTP.

Note that you can right-click on any amount in a TurboTax form and choose Data Source to see where the number came from. Or choose "About" for more guidance on the data in that field. Blue and Green numbers are either direct entry or carried over from the previous year. Black numbers are calculated by TurboTax.

@HardtoKeepUp

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