In tax year 2019, the IRS provided more detail on how to report Section 199A qualified business income (QBI). Based on this guidance and the updated instructions for Form 1065 and Form 1120S, you may notice a few changes to how QBI appears on your returns.
- Entity level amounts will show on Statement A, which prints with the tax return worksheets.
- Amounts for each partner or shareholder will show on their own Statement A, which prints with their K-1.
Partnership input details
You can find input specifically related to QBI on screen 22, Other Schedule K Items. Here you can:
- indicate if the partnership is a Specified service trade or business (SSTB),
- choose to Exclude rental activities from the QBI calculation,
- check the box to Compute properties separately if you want each rental activity to be separately stated, or
- check the Partnership is Not a qualified trade or business box to turn off the QBI calculation.
You can also find override fields for specific QBI amounts here.
Rental Real Estate (screen 17)
Each RRE activity has a Qualified Business Income Information section where you can:
- indicate if the property is a Specified service trade or business (SSTB),
- override QBI amounts,
- aggregate the property with others on the return,
- use the Partner overrides to specially allocate QBI amounts (if separately stating this property),
- check the Business is NOT a qualified trade or business box to exclude the property from QBI calculations, or
- enter a Rental real estate enterprise number to claim safe harbor.
Passthrough K-1's (screen 23)
Each passthrough K-1 activity has a Section 199A (QBI) Information (20) section where you can enter the QBI information received from another entity. If you need to specially allocate QBI entered here to partners, use the Partner overrides in the General Information section.
Specially allocating QBI
You can allocate ordinary income QBI amounts to partners on screen 29, Special Allocations.
To specially allocate separately stated activities - like passthrough K-1 income, additional trades or businesses, or rental real estate activities you've chosen to state separately - use the Partner overrides on the activity's input screen.
To specially allocate any QBI amounts that you've included in an aggregation, use the Partner Aggregation Overrides on screen 32.2.
S-Corporate input details
You can find input specifically related to QBI in Screen 27, Other Schedule K Items in the Section 199A (QBI) Information section. Here you can:
- indicate if the S corporation is a Specified service trade or business (SSTB),
- choose to Exclude rental activities from the QBI calculation,
- check the box to Compute properties separately if you want each rental activity to be separately stated, or
- check the S Corporation is Not a qualified trade or business box to turn off the QBI calculation.
You can also find override fields for specific QBI amounts here.
Rental Real Estate (screen 21)
Each RRE activity has a Qualified Business Income Information section where you can:
- indicate if the property is a Specified service trade or business (SSTB),
- override QBI amounts,
- aggregate the property with others on the return,
- use Shareholder overrides to specially alllocate QBI amounts (if separately stating this property),
- check the Business is NOT a qualified trade or business box to exclude the property from QBI calculations, or
- enter a Rental real estate enterprise number to claim safe harbor.
Passthrough K-1's (screen 24)
Each passthrough K-1 activity has a Section 199A (QBI) Information (20) section where you can enter the QBI information received from another entity. Use the Shareholder overrides if you need to allocate the QBI to shareholders differently from Lacerte's automatic calculation.
Allocating QBI to shareholders
Lacerte will automatically allocate QBI amounts by the shareholder's ownership percentage. To allocate QBI amounts differently, you can use the Schedule K-1 Overrides (screen 33) section labeled Section 199A (QBI) Information.
To allocate separately stated activities - like passthrough K-1 income, additional trades or businesses, or rental real estate activities that you've chosen to state separately - use the Shareholder overrides on the activity's input screen.
To specially allocate any QBI amounts that you've included in an aggregation, use the Shareholder Aggregation Overrides on screen 27.3.
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