Section 199A from LLC/Partnership 1065 to S Corp 1120S to Individual 1040

LLC/Partnership issues K1 to S Corp partner reporting QBI, wages and UBIA. The S Corp, for the most part, has no other operations of its own other than owning a 46% interest in the LLC and therefore has no wages paid in its own operations. In Pro Series, the S Corp K1 generated to the 100% stockholder is essentially reporting through the QBI, but zero wages and UBIA since it sees no wages or UBIA anywhere in the return of the S Corp. i.e. it is not using those three elements brought in to the 1120S via the partnership K1 worksheet). Therefore the S Corp shareholder (income in excess of $415K) has $0 199A deduction due to the wages paid limitation.

Since the elements of QBI, Wages and UBIA flow through the entity that generated them (1065 entity) to the individual return (1040 entity) where the deduction is actually realized, it would seem reasonable that an intermediate entity between the entity generating QBI and the individual taking the 199A deduction would do nothing more than pass these items (intact) through to the individual return. i.e. Even though the intermediate S Corp entity had no wages itself, it would still pass through the three elements of QBI, Wages, and UBIA as was reported to it by the Partnership entity.

Should these elements not flow through intact, or are the elements of QBI, Wages and UBIA recalculated at the S Corp level all over again?

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