TP died in 2020, no QBI?

[joanmcq]

TP died in August 2020, had a rental property.  I put in that the property was disposed of on DOD to stop depreciation, used the 'do not calculate gain or loss' option.  The property went into a trust.  Anyways, ATX isn't calculating QBI even though there is rental income on deceased TP return.  Is this correct?  I don't remember anything regarding deceased tp not qualifying for QBI.

[jklcpa]

One of the requirements to be qualified property under sec 199A is that it must be held and available for use in the trade or business at the close of the year, and this may be why the program is stopping the deduction.  I think it is available at the close of this person's tax year because the tax year for the deceased ended on his or her DOD, but you may want to research this or wait for someone else here to chime in. Perhaps someone else has run into this, because I have not as yet.

Rather than marking this as disposed of and not calculating gain, you could try indicating that it is out of service and see if that correctly calculates the depreciation and still allows the QBI, or override the depreciation expense and not indicate out of service at all to allow the QBI to calculate.

Sorry I can't be more help.

[Margaret CPA in OH]

Another possible option is to file the return as of date of death as that is when the taxpayer's year ended.  I just read this morning about possible tax planning opportunities (doesn't seem, well, seemly) regarding filing jointly or separately in this regard.  Your situation may not directly apply but I wonder if just having a 'short year' would make a difference.  I agree with Judy that trying alternate indications may help. 

[joanmcq]

Before I did the dispose of property, he owed no tax.  So a short tax year wouldn't hurt.