Section 199A, Qualified Business Income Deduction (1041)

Alerts and notices

The qualified business income for each activity is equal to the respective net income, net of passive activity limitations, not considering prior year passive losses allowed. UltraTax/1041 calculates the qualified business income deduction and generates the Qualified Business Income Deduction worksheets when the following conditions are met.

Note: If you allocate 100% of the distributable net income to the beneficiaries, UltraTax 1041 still generates a Detail Worksheet to let you know that the calculation has occurred. This worksheet is non-submittable and is not part of the government collation.

UltraTax/1041 reports the deduction on Form 1041, page 1, line 15a. If you disagree with the calculated amount, you can force the amount of qualified business income for the activity in the Qualified business income (Force) field on Screens C-2, F-2, Rent-2, K1-3, or K1T-2.

Note: If you leave the Activity qualifies as trade or business for section 199A deduction field blank on the activity screens, a critical diagnostic message prints.

QBID is not calculated for

UltraTax/1041 adjusts Form 1041, Schedule B, line 1 to add back the QBID deductions per the form instructions.

UltraTax/1041 excludes S corporation activities from the calculation for QSST returns. An FYI diagnostic will tell you to enter S corporation information in QSST additional information statement in Beneficiary Module; only enter the information provided on 1120S K-1.

Reporting QBI to beneficiaries

When a share of distributable income is allocated to a beneficiary, UltraTax/1041 reports this information to each beneficiary on the Beneficiary Qualified Business Income Deduction Information worksheet. This worksheet lists a portion of the dividends identified as Section 199A on Screen Income and Broker. A line is generated on the worksheet for each activity (located on Screen Income, Broker, K1-3, or K1T-2) with a 1 in the Qualifies as trade or business for Section 199A field. You can only use share of distributable net income to allocate this information to the beneficiary; it doesn't matter how the actual income was allocated to the beneficiary.

Calculating qualified property

UltraTax/1041 prints the Qualified Property Report for the activity when you select Yes in the Qualifies as trade or business for Section 199A field in Setup > Activity in the asset module. The qualified property amount transfers from the asset module to the Unadjusted basis of qualified property field on Screens C-2, F-2, Rent-2, K1-3, and K1T-2. If you disagree with the amount transferred from the asset module, you can change the amount in the Unadjusted basis of qualified property field on the applicable screen.

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