Trust K-1 0 rental income but positive QBAI

Technical topics regarding tax preparation.
#1
Posts:
886
Joined:
26-Feb-2016 10:14pm
Location:
Oakland CA
2018 Irrev trust showed 0 net rental income on page 1 of 1041 because of passive loss carryover wiping out 2018 positive net rental income.

Large proportion of the dni was distributed.

Does it make sense that the K1 could show positive QBAI ? I'm thinking it does because the passive loss universe, especially for pre 2018 losses, is independent of the Sect 199A world.
 

#2
Posts:
8151
Joined:
4-Mar-2018 9:03pm
Location:
The Office
Trust taxation is a weak point of mine, but what you're describing is completely possible with an individual taxpayer. Pre-2018 passive activity losses don't factor into the QBI calc, so it's possible the taxpayer could have positive QBI for a T/B but zero taxable income for that same T/B if taxable income was reduced by pre-2018 PAL. Pretty good spot to be in...

lenraphael wrote:the passive loss universe, especially for pre 2018 losses, is independent of the Sect 199A world.


Pre-2018, yes. Post-2018, not so much...

If a post-2018 PAL is disallowed under 469, it's disallowed for 199A. See Treas Reg §1.199A-3(b)(2)(i)(B) and §1.199A-3(b)(1)(iv). Drake tax software still does not handle this correctly, and requires tracking in a separate workpaper and overrides in the software.
 

#3
HowardS  
Posts:
2818
Joined:
21-Apr-2014 3:12pm
Location:
Southern Pines, NC
Retired, no salvage value.
 

#4
Posts:
496
Joined:
12-Jun-2014 6:13pm
Location:
North Carolina
Actually, fwiw they fixed that . "Drake tax software still does not handle this correctly"
Because on T.A. ten was the most you were allowed
 

#5
Posts:
8151
Joined:
4-Mar-2018 9:03pm
Location:
The Office
Tenletters wrote:Actually, fwiw they fixed that . "Drake tax software still does not handle this correctly"


As of last month, Drake still had calculation issues on 1040 returns with syndications (K-1) that had multiple T/Bs. No idea if it's been fixed since then.
 


Return to Taxation



Who is online

Users browsing this forum: AlexCPA, Google [Bot], Google Adsense [Bot] and 32 guests