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QBI

Report qualified business income (QBI) for a partnership

Use the K1QBI screen to enter information from the partnership or S corporation. When a partnership or S corporation includes more than 1 trade or business on the
QBI/qualified PTP items subject to partner-specific determinations
 from the Schedule K-1 statement, enter this information on the K1QBI screen by adding more units. When the taxpayer has the following, we recommend using more than 1 K-1 1065, 1120S unit instead of multiple K1QBI screens.
  • Mixture of passive and active activities
  • Regular activities and publicly traded partnerships with loss
  • Both regular activity and specified service business

Partnership reports QBI

The partnership or S corporation makes the initial determination about which items are qualified income, gain, deduction, and loss. It gives each partner their distributive share of items that may qualify at the partner level. When necessary, state these items separately so the partner can determine the deduction.
The partnership needs to report whether any of its trades or businesses are specified service trades or businesses (SSTBs) and identify any aggregated trades or businesses.

Determine whether to include Schedule K-1 items in QBI

The amounts that a partnership or S corporation report on the Schedule K-1 as
QBI/Qualified PTP Items Subject to Taxpayer-Specific Determinations
 aren’t automatically included in the QBI. To determine if you can include an income, gain, deduction, or loss item in QBI, review how it's reported on the federal income tax return. For example, ordinary business income or loss is generally included in QBI if it's used to calculate taxable income, and isn't excluded, suspended, or disallowed under any other code section.

Determine the QBI deduction

UltraTax CS uses the information given by the partnership to determine the QBI deduction. Generally, you can deduct the following:
  • Up to 20% of the net qualified business income (QBI)
  • 20% of qualified REIT dividends (also known as Section 199A dividends)
  • 20% of qualified PTP income
UltraTax CS allocates the following items to the 1st unit only when you report the QBI amount from the partnership or S corporation on the K1QBI screen.
  • Basis, at-risk and passive activity loss limitation and post 2017 carryovers.
  • Section 179 expense deducted
  • Dispositions of property with section 179 deductions (K1Sale screen)
  • Section 1231 gain or loss when not included in capital gains and losses
  • Depletion
  • Section 59(e)(2) expenditures
  • Pre-productive period expense deduction
  • Reforestation expense deduction
  • Dependent care benefits
  • Unreimbursed partnership expenses
  • Debt financed acquisition interest expense
  • Deductible part of self-employment tax
  • Self-employed health insurance deduction
  • Self-employed SEP, SIMPLE, and qualified plans deduct

Report QBI on Form 8995 or 8995-A

Use Form 8995, Qualified Business Income Deduction Simplified Computation, when the following apply:
  • The taxpayer has QBI, Section 199A dividends, or PTP income.
  • Taxable income before the QBI deduction is equal to or less than $160,700 ($321,400 if married filing jointly, or $160,725 if married filing separately).
  • The taxpayer isn’t a patron in a specified agricultural or horticultural cooperative.
Use Form 8995-A, Qualified Business Income Deduction, when the simplified form conditions aren't met.
note
Refer to the IRS instructions for more information about Form 8995 or Form 8995-A.

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