How are you handling 199A issues?

Key tips and advice the working tax pro can use.
#21
makbo  
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lucyko wrote:Using the recent release of Drake software, I prepared a dummy return for 2018 . My focus was on the 199 A provision and how the software is calculating the 20 % pass thru

How about the items in post #12 (which was sort of a re-boot of this thread)? What about 2.5% of unadjusted basis in rental assets?
 

#22
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Ken, see Prop. Reg. 1.199A-6(b)(3). Pass-thru entities must separately identify and report on a Schedule K-1 ...If a passthru entity fails to report these items...the owner's share of QBI, W-2 wages, etc. will be presumed to be zero.

I would amend the K-1 in order to take the deduction. As far as I can tell and everything I have been told in CPE, you will get the full 12 months for fiscal year-ends ending in 2018.
 

#23
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Thanks very much for the information, Seaside. My only final thought would be since the 1120S has been E-Filed, but, the return isn't due until Jan. 15, 2019, it would seem I could prepare a "superseding" return as opposed to an Amended 1120S. I've never done one, but, one advantage is that I could just refile [I'm not sure if Proseries will allow me to E-file the corrected return as opposed to mailing in a paper copy] the complete return with "Superseded" written on the top. That way I wouldn't have to send in only certain schedules as part of an Amended 1120S. This return would actually take the place of the original return and be treated as such by the IRS if filed by the original due date [including extensions]. I've never done a "superseding" return. Does my thinking make sense on doing this? Also, Proseries is showing the codes to be used on line 17 of Schedule K for 2018. Would it be advisable to use these letter codes in re-doing the 2017 return or would it be better to just reference the item such as"QBI" and "W-2 wages", for example?
 

#24
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I put things on Line 17 - Code V (Other Information) and wrote everything out (ie, QBI $XXXX, W-2 Wages $XXXX) Since the codes are not on the 2017 tax returns, I would be hesitant to use them. Don't know if how I did it is correct, but its the best I could do with the information I had at the time.

As for a "superseded" return, I can't help you with that as I have never prepared one either. Maybe someone else can chime in on that issue.
 

#25
makbo  
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missingdonut wrote:initial computation of QBI is that it is taking Schedule C income to the deduction worksheet, with no reduction for a solo 401k deduction, and most surprisingly to me, no adjustment for the 1/2 of SE tax.

The solo 401k does not reduce QBI, does it? Only taxable income.
 

#26
lucyko  
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Drake software is calculating QBI the same as Ultra Tax with no deduction for a solo 401k deduction and no adjustment for the 1/2 of SE tax .

As I recall there were a couple of other extensive threads on this topic and the conclusion was there should be no adjustment for these 2 items . I think the software is working properly
 

#27
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There was no conclusion. The law states that QBI is the net amount of qualified items of income, deduction, etc. effectively connected with the conduct of a trade or business in the US and included in taxable income for the year.

I can see both arguments for a 401k plan deduction. I have a hard time seeing an argument where the 1/2 SE tax isn't a deduction effectively connected with a trade or business.
 

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