4797 and S.199A

[Edsel]

If Farm profits are subject to the QBI deduction, it appears that gains on sale of farm equipment, cattle, etc. resulting from Form 4797 are NOT subject to QBI.

Does this make sense?  (Not that any tax regulation has to make sense).  Any ideas why not?

 

[EricF]

Items ultimately treated as short- or long-term capital gains, or short- or long-term capital losses, are not QBI, including net Sec. 1231 gain.  

But if Sec. 1231 gains are netted with Sec. 1231 losses to produce a loss, the loss does reduce QBI.

If there is Sec. 1245 recapture or ordinary gains, that does increase QBI.

[Edsel]

Thanks Eric.  Of course, any portion of a 4797 gain which is capital gains would not be subject to s.199A.  I should have thought of that when I posed the question.

I believe everything you state in your response is correct.