Partner's share of W-2 wages

Technical topics regarding tax preparation.
#1
Posts:
716
Joined:
15-Jun-2019 8:24am
Location:
Virginia
I have a supermarket partnership K-1 which basically has the following 4 items:

Ordinary business income (loss): -1500
Net rental estate income (loss): +6500 (not listed on QBI pass-through entity reporting but on K-1)
Partner's share of W-2 wages: 90,000
UBIA of qualified property: 100,000

The taxpayer is a passive investor and receives no wages, the wages reported might be his "share".

My questions are:

(a) Is there a qualified business income deduction at all?
(b) is there anything carried over to next year?
(c) if Ordinary business income is positive, will there be a qualified business income deduction even if the wages were not paid to him?

Thanks!
Please consider visiting this post where my question at the end has not been answered yet:
viewtopic.php?f=8&t=12065, thanks!
 

#2
lckent  
Posts:
597
Joined:
21-Apr-2014 8:19pm
Location:
Colorado
It appears that the partnership is not treating the rent as QBI. It is my understanding that the partners can't treat anything as QBI unless the partnership does.
I think you have a QBI loss c/f to next year.
CPA, Retired
 

#3
Posts:
1121
Joined:
12-May-2021 11:01am
Location:
Alabama
Report the -1500 on Form 8995 line 1 or Schedule C (Form 8995-A) line 1.

Evidently the rental income is merely an income-producing activity, not a business. Therefore, ignore it for QBI purposes.

Because this business had a loss, the 90,000 and 100,000 amounts will not be used, unless you're aggregating the business with another business on Schedule B (Form 8995-A), in which case they will go on Form 8995-A lines 4 and 7 respectively (combined with the wage & UBIA amounts of the other business).

The 90,000 has nothing to do with whether the partner received wages. (Partners are not allowed to receive wages from a partnership anyway.) Rather, this is the total of the W-2 wages paid by the partnership to employees, multiplied by the partner's % of ownership.

Assuming there are no positive QBI amounts this year, these losses will carry forward to next year to offset positive QBI amounts next year, before any QBI deduction will be allowed. See Form 8995 line 16 or Schedule C (Form 8995-A) line 6.
 


Return to Taxation



Who is online

Users browsing this forum: jhanle1948, Kendrick, KoiCPA, ManVsTax, MAPCPA60, Nightsnorkeler, Nilodop, rbynaker, sjrcpa, Wiles and 153 guests