QBI

[Christian]

A client has come in bringing two K-1 1065s for an oil and gas pipeline and a coal mining company. Most of the items on them fall neatly into their assigned forms on the 1040. I am not as familiar on the Qualified Business Income deduction as I would like so I have been rereading the rules. The rules state that income from a publicly traded partnership qualifies for the QBI. The amounts reported in box 1 of both K-1s as ordinary business income on which he is taxed look to me as qualifying for the deduction. He is actually paying tax on income he did not receive. On making the computations the QBI is indicated on Form 8995-A page 2, part iv, line 28 and the 20% is duly calculated and posted to line 13 on form 1040 where it is subtracted. But on reading the QBI flow chart I run into this ." Is the item income (loss) from a qualified PTP? If “Yes,” it’s not QBI, but it’s included in the REIT/PTP component of the QBI computation. Include this item as a qualified item of income, gain, deduction, or loss from a PTP". Which pretty much negates the deduction or so it appears ?

[Lee B]

The information should be reported in Box 20 code Z which should have a supplemental page with the details that you need.

[Christian]

I referenced box 20 and sure enough here is what I found in 20Z1 " Section 199A Publicly Traded Partnership (PTP) Income". This figure exactly matches the number in box 1 as ordinary business income which would appear now to be available for the deduction. The worst that could happen I guess is it would be disallowed.