QBI adjustments for tax credits
Posted: 10-Feb-2019 3:38am
On a Form 1120S for 2018, ordinary business income is $50,000 on line 1 of Sch. K. Line 13 of Sch. K shows a Form 8826 Disabled Access Credit of $5,000 and on line 16 of Sch. K there is shown non-deductible expenses of $5,000 since we are taking the credit. Proseries is showing QBI as $50,000 and not reducing it by the $5,000 credit. I assume this is correct and I don't have to adjust the 199A amount down to $45,000 as I can find nothing that talks about a reduction being necessary when a tax credit is taken instead of the expense for an item. I did make a Schedule M adjustment since I wrote down the ADA asset improvement account on the books so as not to double dip later if the improvement or the business was sold. Is Proseries correct in using $50,000 for QBI even though my M-1 adjustment reflects a book income of $45,000? Thanks for any comments.