K-1 1120-S QBI Question

[GraceNY]

Shareholder has an interest in 2 profitable passive S-Corp's, will he qualify for the QBI deduction?

(1) Multi- Family Apartment Building  K-1 shows Net Rental Real Estate Income of 25k.  K-1, Box 17, Code V statement shows the rental income $25k, W-2 Wages 15k and UBIA of qualified property 75K. 

(2) Commercial Building K-1 shows Net Rental Income of $20k, K-1, Box 17, Code V shows the rental income of 20K and UBIA of qualified property of $2k.

When I enter this in ATX, it calculates a QBI deduction.

I am concerned about this because (1)  the shareholder does not materially participate in this entity, (2) the income is listed as passive and (3)  the K-1, box 17, Code V statements say "QBI items subject to shareholder-specific determination."

Thanks in advance for your input.

Grace

 

 

[Lee B]

Your client can delegate his participation to representative(s) or agent(s).

Your don't say what his ownership interest is or who is responsible for managing or delegating responsibilities?

NEI

 

 

[GraceNY]

1 hour ago, cbslee said:

Your client can delegate his participation to representative(s) or agent(s).

Your don't say what his ownership interest is or who is responsible for managing or delegating responsibilities?

NEI

 

 

I don't understand what you mean by "delegate his participation to representative(s) or agent(s)

Entity # 1  25% ownership and Entity #2 12.5% ownership

This is a family operation with his oldest brother being responsible for managing/delegating responsibilities.

[Lee B]

52 minutes ago, GraceNY said:

 

Entity # 1  25% ownership and Entity #2 12.5% ownership

This is a family operation with his oldest brother being responsible for managing/delegating responsibilities.

Taking QBI was be difficult to justify with this fact pattern.

[michaelmars]

you get the qbi, the qualification is at the entity level to provide the amounts and then if its not an sstb you get it.    its not the same as passive/active rules.  the builiding is a qualified business.