Ordinary Income of a Partial sale of a PTP creates QBI?

QBI?

Enterprise products partners PTP reports a loss for 199(a) but also separately stated a §751 gain (line 20AB of the K-1). My research indicates §751(a) & (b) qualify as QBI. TP sold a partial interest in this PTP and the sales sheet shows a recat to ordinary income of the same amount. Is it safe to assume the 4797 gain on the sale transaction qualifies as 199(a) income?

And a second question: does the ordinary gain on the partial sale of the interest free up that much of suspended loss from this activity?

Ordinary income under Sec. 751(a) or (b) that is considered attributable to the trades or businesses conducted by the partnership is qualified PTP income a/k/a 199a income.

I don't believe that the same income will free up any PAL C/O's, hopefully someone will chime in with more info.

Ordinary income under Sec. 751(a) or (b) that is considered attributable to the trades or businesses conducted by the partnership is qualified PTP income a/k/a 199a income.

I don't believe that the same income will free up any PAL C/O's, hopefully someone will chime in with more info.

In order for ProFx to include the ordinary income in QBI I have to tag it to the passthrough entity. When I do that, even though it's a PTP the system is allowing loss to be deducted equaling this ordinary income from the recharacterized partial sale. I will probably play it safe and just override the QBI and don't tag the income to the entity since I don't think anything should be freed up until the activity produces income or there is a full disposition.

Gain for the sale or partial sale of a passive activity is passive income, form a PTP is PTP income. A fully taxable disposition frees up ALL losses, but a partial sale allows the gain to be offset by passive losses.

You may well find that you will get greater interest in your Post, if you "spell out" all abbreviations and all assumed treatments of code sections.
Many here don't know what you are talking about, or don't want to struggle to "get it".

You may well find that you will get greater interest in your Post, if you "spell out" all abbreviations and all assumed treatments of code sections.
Many here don't know what you are talking about, or don't want to struggle to "get it".

novacpa, I didn't want a greater interest in the post. I used PTP (publicly traded partnership) & QBI (qualified business income) acronyms as well as code sections because this area can be complicated and I only wanted responses from those very familiar how these things work and those people know what I was referring to. But I get it.

Gain for the sale or partial sale of a passive activity is passive income, form a PTP is PTP income. A fully taxable disposition frees up ALL losses, but a partial sale allows the gain to be offset by passive losses.

TaxMonkey, that makes sense about partial sales but I can't find anything in my searches that says the ordinary income aspect of the partial sale is considered passive income (because I think at the point of sale it becomes non-passive) that can be used to offset a PTP's suspended losses. Do you have any cites or code sections that I can review? Running out of time on this one.

No cite, but discussed here:
https://www.taxprotalk.com/forums/viewtopic.php?f=8&t=918&p=9947&hilit=+passive#p9947

Also look at:
Income from the sale or other disposition of passive activity is generally passive income if the activity was a passive activity in the year of sale (Reg. § 1.469-2T(c)(2)(i))

No cite, but discussed here:
https://www.taxprotalk.com/forums/viewtopic.php?f=8&t=918&p=9947&hilit=+passive#p9947

Also look at:
Income from the sale or other disposition of passive activity is generally passive income if the activity was a passive activity in the year of sale (Reg. § 1.469-2T(c)(2)(i))

Thanks HowardS for the cite. Reg. § 1.469-2T(c)(2)(i)(B) Dispositions of partnership interests and S corporation stock. A partnership interest or S corporation stock is not property used in an activity for purposes of this paragraph (c)(2) indicates we can't use (c)(2)(i) and (e)3 talks only of an activity inside the partnership. I am proceeding on the side of caution and will keep the losses suspended to play it safe since I can't find anything definitive to back up the loss trigger.