Qualified business income deduction calculations and troubleshooting (1040)

Alerts and notices

Use this article to determine how and where the Qualified Business Income Deduction (QBID) is calculating and how to correct any QBID amounts you disagree with. If you are looking for information on how to enter QBID information, see the Qualified business income deduction (QBID) overview.

Calculations

Where does my QBID calculation appear in the return?

UltraTax CS calculates the Qualified Business Income Deduction on Form 1040, line 9 using the following worksheets.

The Qualified Business Income Deduction Simplified Worksheet

Located in the QBID folder in Form View, this worksheet prints under the following conditions:

The Qualified Business Income Component Worksheet and Qualified Income Deduction Worksheet

Located in the QBID folder in Form View, this worksheet prints under the following conditions:

Where does the Qualified Business Income from each activity come from?

For a breakdown of each activity’s QBI, see the Qualified Business Income worksheet on the last page of the Schedule C, Schedule F, or Schedule E in Form view. These worksheets explain the amounts for each activity that flows to the QBID worksheets.

Troubleshooting scenarios

Schedule C, Business

Verify the activity has a Business Name in Screen C in the Business folder.

UltraTax CS automatically includes Schedule C businesses as trade or business for the qualified business deduction. For activities that do not qualify, enter zero in the Qualified business income (Force) field on Screen C-3.

Schedule E, Rental

To print the statement, verify the following:

  • Enter X in the Section 199A safe harbor field on Screen Rent-2 in either the Rent & Royalty or Screen 4835-2 in the Farm Rental folder. Mark the field on all activities you wish to be included in the safe harbor statement.
  • If electronically filing a return that includes the Section 199A Trade or Business Safe Harbor statement, the signed statement must be attached to the electronic file as a PDF attachment. Select Edit > Electronic Filing Attachments and in the Attachment title field select Section 199A Safe Harbor.

As a general rule, if the royalty is Oil and Gas and it is a working interest, Schedule C is used per the Schedule E instructions. Oil and Gas income that is not a working interest is generally investment income. If this royalty is considered a trade or business instead of investment, utilize the Qualified Business income (Force) field on Screen Rent-2.

Verify that the property type is not a Vacation/Short-term, Royalties, or Nonbusiness personal property on the Rent screen for this property. These items are not included in the QBI calculation. In addition, rental properties with a foreign address are not included. The Qualified Business Income Calculation Worksheet in the Schedule E Form View will add a statement below line 10 stating “This activity is not a trade or business for QBID."

Note: The Royalties type will allow for a force to be added on the Rent-2 screen in the Qualified business income (Force) field to the show on line 10 of the Qualified Business Income Calculation Worksheet with the added note “Qualified Business Income has been forced on Screen Rent.”

 

Schedule F, Farm

UltraTax CS automatically includes Schedule F activities as businesses that are trade or business for the qualified business deduction. For activities that do not qualify, enter zero in the Qualified business income (Force) field on Screen F-3. For Rental and Farm rental activities, the determination of trade or business must be made on Screen 4835-2.

Schedule K-1, 1065 and 1120S

In the 1040 return, choose File > Client Properties > Advanced Properties and mark Elect to import the data share of 1065 Schedule K-1’s by the per activity method, in lieu of the single K-1 method. This will import the information separately for each activity.

Verify the activity has the Specified service business checkbox is marked in the 1065 / 1120S return in the applicable activity's Screen QBI.

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