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Question

What is the difference in return presentation if the qualified production activities income is calculated at the partnership level or the partner level?

Answer

If the partnership is an eligible entity as defined in Revenue Procedure 2007-34 and chooses to calculate the qualified production activities income (QPAI) at the entity level, select 1 in the Method for computing qualified production activities income field in Screen K-3. UltraTax CS uses the applicable fields to complete the Domestic Production Activities Deduction Worksheet. The worksheet calculates the totals of QPAI, Form W-2 wages, and domestic production activities deduction from cooperatives from oil-related and all activities. Information from this worksheet transfers to Schedule K, line 13d as a required statement and Schedule K-1, box 13, codes T (domestic production activities deduction from cooperatives only), U, and V.

If the partnership does not calculate QPAI at the entity level, select 2 in the Method for computing qualified production activities income field in Screen K-3. UltraTax CS transfers all information from oil-related and all activities to Schedule K, line 13 as a required statement and Schedule K-1, box 13, code T. The Domestic Production Activities Deduction Worksheet and Schedule K-1, box 13, codes U and V will not be completed.

Related topic: Domestic production activities deductions FAQs (1065)

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