K-1 from 1065 line 20 showing Z* STMT

[Anonymous_]

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@jg31 wrote:

For 2018 the amounts were clearly identified on the statement for Code Z and code AB.  For 2019 , nothing.  Also line 20 for the 2019 K-1 only shows code Z, nothing for code AB.  

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Line 20 of the 2019 K-1 (1065) has been changed. Now all Section 199A information is consolidated on Line 20 with only a Z Code - a separate statement is (or should be) provided that breaks down the component parts.

[schrag33]

Statement shows:  Rental Income, and Unadjusted Basis of Assets.  Do I record both on the Return?

[DavidS127]

Yes, those Section 199A amounts go on your tax return.  Here's how:

Enter your code Z on the "box 20 screen".  You don't need to enter an amount on that box 20 screen, but you do need to click Continue after you have entered the code Z.   The next screen is "Describe the Partnership" and the the next screen is "We see you have Section 199A income" and then you should get to the screen you need to make your entries: "We need some information about your 199A income". When you check the box on the lines you need, other boxes will "open up" to enter the amounts from your Section 199A Statement/STMT.

Note that Unadjusted Basis of Assets amount goes on the "....has UBIA of qualified property" line.

To get back to the K-1 summary screen and find the Schedule K-1 to edit, click the "magnifying glass Search" icon on the top row, enter "k-1" in the search window and press return or enter, and then click on the "Jump to k-1" link to find the K-1 you need to edit.

Here is a screenshot of the "We need some information about your 199A income or loss"  screen where you enter the information from your K-1 Section 199A Statement/STMT:

[rfgoern]

Form K-1, item 20, subitem z provides no answer.  How do I find the answer?

[mom2kidsdog]

Here is what I did in TurboTax 2019 for Home and Business, and it seemed to work for me, as I no longer get errors in the review portion of the TurboTax dialog box.

You can click 'FORMS' in top left corner at any time and enter amounts / information directly to the 1040 schedules and form. After clicking Forms, scroll down the left column list of forms / worksheets until you find the 

K-1 Partner form for which you need to enter information for code "Z" from the K-1 statement. Click on that form, and the K-1 information and worksheets will appear on the right side of the screen.  Scroll down to Section D1, Qualified Business Income Deduction - Statement A Information. Here  you will find the line items for entering the ordinary business income (loss), rental income (loss), Section 1231 gain (loss), W-2 wages, and the UBIA amounts from your K-1 Partner Code 'Z' statement.

Good luck!

[LaJolla]

I'm a little confused as to exactly what "Statement A" refers to when TT asks for additional information regarding the 199A income I entered since my tax packet from my MLP does not include anything designated as  "Statement A"  yet does report 199A income.

In 2020 I sold my shares of the MLP owned due to the complexity of reporting the K-1 despite being able to import  K-1 txf file directly into TT. This year everything was imported as it should, and it even imported the 20Z code as a place holder, but the actual number was missing; however, my the tax package specifically forewarned me that this block would not be imported. 

I then manually entered the amount listed on my K-1  which was designated 20Z1: $194., into TurboTax, but then TT requests additional information regarding this income and tells me to refer to  "Statement A" which should be included with my tax package.

My tax packet does include a bunch of information, but none of the documents are specifically designated "Statement A". Therefore, its unclear if "Statement A" is also referred to as something else, but if so I was unable to locate that information anywhere.

My tax package includes a letter from MLP which basically explains that  TCJA provides new deductions for  PTP including 199A-Qualified income located on Line 20Z of K-1 and also informs me that additional information regarding tax changes and changes in K-1 reporting are included on "List of Contents and Additional Instructions".  However, I do not think the "List of Contents and Additional Instructions" document  is "statement A" since it simply explains what is included in each line on the K-1 and where it should be entered on the tax forms. Moreover, it does not specifically discuss what information from the K-1 should be included on the 199A work sheet.  

My tax package also includes a "Supplemental Schedule" which follows the K-1 but this simply includes items in box 20 (V1: Unrelated business income for tax exempt entities, Z-199A income, AB Section 751 gain, AE excess taxable income, AH gross profits) none of which are possible entries listed under the 199A income on TT (the ones that may be applicable in my case are: Ordinary Income-Box 1, other income (loss)-Box 11, 1231 gain/loss-Box 10, other deductions-investment expense Box 13H) and this information is on my K-1 and not  on "Statement A".

My tax package does include another document entitled "Reported amounts applicable to carryovers" which lists various amounts for Sec 163j-excess business expense,  passive activity carryover and also has a section for 199A PTP Income/loss however this amount listed for 199 PTP Income/Loss for 2018-2020   simply reflect the exact amounts included as Ordinary Income in box 1 of my K-1, and only 2020 shows an amount listed for 199A PTP Section 751 Income which is merely my Ordinary Income associated with the sale of the MLP.

Therefore, can someone please clarify what "Statement A" is and where I can find it, or tell me if I can just enter the amounts listed on my K-1 when TT asks "We need some more information regarding you 199A income"??

Thanks so much

[JamesG1]

Statement A was intended to be a document included with the K-1 listing the relevant Section 199A information.

IRS 2020 Instructions for Form 1065 states:  (page 49)

Section 199A information (code Z).

The qualified business income (QBI) deduction may be taken by eligible taxpayers, including individuals and some trusts and estates. The deduction is determined at the partner level. Partnerships are required to report information necessary for their partners to figure the deduction. Use code Z with an asterisk (Z*) on each partner’s Schedule K-1 and enter “STMT” in the entry space to indicate that the information is provided on an attached statement that separately identifies the partner’s distributive share of:

• 1. Qualified items of income, gain, deduction, and loss;
• 2. W-2 wages;
• 3. Unadjusted basis immediately after acquisition (UBIA) of qualified property;
• 4. Qualified publicly traded partnership (PTP) items;
• 5. Section 199A dividends, also known as qualified real estate investment trust (REIT) dividends.

These are the items that you are looking for in your documentation or from your provider which you need to complete your qualified business income deduction entries.

[LaJolla]

Thanks for the follow-up. I guess in my case  my “supplemental  statement" would be equalivant to a "Statement A".

However that said , The information on the supplemental statement which further explains the STMT items in Box 20 really do not pertain to the questions TT is asking. My supplemental statement has the following:

V1 Unrelated business income --only applicable to tax exempt entities,

Z-199A income,

AB Section 751 gain- this is alsa reported on my sales schedule and represents my ordinary income.

AE excess taxable income, and

AH gross profits- only applicable to tax exempt entities

Yet after after I enter all my information from my K-1 and get to the next Turbotax screen “ We see you have section 199A income, is the business that generated the 199A income a separate business owned by the partnership” ?

TT gives you 3 options and you MUST pick one:

1. The income comes from a partnership
2. The income comes from another business
3. The only source of income is from section 199A dividends/reit dividends.

After I clicked #1, I  get another screen and TT asks for additional information pertaining to the below categories and TT says this information should be found on "Statement A" which came with your K-1.  The following categories are:

1. Business income (Ordinary Income-Box 1 of my K-1, other income (loss)-Box 11 of my K-1, and other categories that are n/a total ordinary from 4797, rental, royalty
2. 1231 gain/loss-Box 10 of my k-1
3. 179 deductions
4. Other deductions-investment expense Box 13H-of my K-1

As you can see none of this information is on my supplemental document,  but rather its all on my K-1. Furthermore, I have already previously entered this information in TT when it asked me to enter information from each block of my K-1. Therefore, I am uncertain if TT wants me to fill out this information again or if I am missing something.

[JamesG1]

I agree, at the screen We see you have Section 199A income you will probably choose The income comes from the partnership that generated this K-1.

At the screen We need some information about your 199A income, at a minimum you will enter: 

• the income line,
• a W-2 wage line and
• a UBIA of qualified property line. 

But you do not describe the second and third items in your attachments.  It is not clear to me whether the information that you reference is related to sections 199A income or not.

You want to reach the screen Great news!  You get a tax break if you qualify for a qualified business income deduction.

[LaJolla]

Attached is the second screen shot on the TT interview which is asking for my information pertaining to the 199A income. Next to the boxes I entered where the information is found on my K-1. 

The next screen shot is the information found on my supplemental statement which only states the amount of section 199A income and according to my tax package this information is supposed to be entered on form 8995 line 6.

[LaJolla]

By the way, I am using the Home and Business TT download

Your screen shot from TT differs from the screen that I  reach after I enter my K-1 information.

My first Screen and TT says "We see that you have 199A income, asks me to provide additional information , then after I click on box 1, I then reach the second screen which asks for additional information from my "statement A" , but none of the information they are requesting is on my supplemental statement, its all on my K-1.

[Irene2805]

If you don't have a Statement A attached to your K-1, enter the appropriate figures from the K-1 itself.  The figures entered on this screen will flow to the Qualified Business Income Deduction Info in Section D1 of your K-1 to calculate your QBI deduction.  They are not added to the figures already entered on the K-1.

To see the QBI calculation you can view your K-1 in Forms Mode.  Please follow these steps:

@LaJolla

1. Go into Forms Mode by clicking on the Forms icon in the top right of the blue bar. 
2. In the Forms in My Return list on the left, click the form you want to review.  The form will appear on the right side of the screen.
3. You can view the form on the screen or you can print a copy by clicking the Print box at the bottom of the screen.
4. To return to the interview, click on the Step-By-Step icon in the top right of the blue bar.  

[LaJolla]

As previously mentioned I already entered all my K-1 information prior to getting the the 199A section and its unclear if all the sections on the k-1 pertain the the 199A income and if I should enter them again given that each of the blocks already are reported on other tax forms (i.e box 10  on K-1 section 1231 loss which is also reported on form 4797, Box 11on K-1 other income 1256 contracts reported on form 6781, and Box 13 other deductions-Investment INT expense reported on 4952).

You think that if this information was already entered on the k-1 and it was needed in this section TurboTax would just allow it the flow through. Its only a 17.00 difference so I guess I just report all the above number and just have less allowed QBI.

Best regards   

[WendyN2]

@LaJolla I read through your first post and now your most current. Given that you are "ok" with the $17 difference, I won't go into a huge detail, however, I do want to make sure that you know you are correct in that if you've entered your K1 information and the system is again asking you to enter that same information, that you should be very wary of doing so. Anytime I've used a system that I've not used before, I tend to test it by checking the face of my return - specifically, in your case, the K1 - and see how at that point it is going to populate. I then go from there if the K1 does not look as it should. I am glad it was only $17. Just wanted to let you know the route I've taken in past. I've been a CPA for over 15 years and have been doing taxes since I was 14 so I've worked on many different systems and troubleshooting sometimes, if the amount were far greater than $17, really does give peace of mind. 

[LaJolla]

I spoke to someone in the tax department of the MLP I previously owned, and he told me that at least for the MLP  I owned 100% of the 199A income reported in Box 20Z listed on my supplemental statement (STSM) attached to the K-1 was attributed to PTP Qualified income and no adjustments are needed.

He said the the other amounts listed on the K-1 are not directly associated with the 199A income therefore no adjustment are needed and ONLY enter this amount into line 28 of Form 8995A.  

Therefore, this is the only amount I entered.

Thanks for the follow-up

L