Problems with TurboTax Business in preparing trust return

[vparunak]

1.  When I generate K-1's for beneficiaries, they do not include the Schedule A required to support the "STMT" entry in 14 I. How do I get the program to include the Schedule A with the K-1?

2. This trust has rental property that generates QBI. To compute the QBI, Schedule E adds together profit from the business (overall profit less depreciation) with Section 1231 gain. But the trust did not sell any property, so should not have any Section 1231 gain. The value the program puts in Schedule E for Section 1231 gain is the overall profit, without depreciation removed. The resulting reported QBI is nearly twice as large as it should be. I can override this to remove the Section 1231 gain, but it sure looks like a program bug to me.

Please help.

[PatriciaV]

1) You may need to review the Schedule E Worksheet for Rental Property or Schedule E itself to be sure the Yes box is checked for "Is activity a qualified trade/business?".

From the On Demand Tax Guidance for Line 14(I) Section 199A on the K-1 Worksheet (right click on the gray box):

No user entry is required on the K-1 worksheet related to K-1 Code I for Sec 199A information. Box 14, code I will automatically print on each K-1 when the 199A Statement A summary is completed, and a beneficiary's copy of Statement A will print with each K-1.

The 199A Statement A summary is automatically populated when information is entered in the "Qualified Business Income Smart Worksheet" on one or more separate business activities (Schedule C, Schedule E, Schedule E Farm Wks, Schedule F, and pass-through information from partnership, S corp, or estate/trust K-1 entry worksheets).

2) For a trust or estate, 1231 gain/loss is included in QBI only if there is no net 1231 gain at the overall tax return level and thus 1231 amounts are treated as ordinary. You may wish to review any assets for the business and confirm there are no entries in the Section 199A attribute section (gains/losses). Use the QuickZoom button on Schedule E QBI Deduction Row H(1) to see the source of the Sec 1231 gain/loss in this section.

Note: If you are unable to trace the calculations for the QBI component, you may share a TurboTax ".tax2024" file to allow us to test this issue further.

To send us a “diagnostic” file that has your “numbers” but not your personal information, please follow these instructions: 

In TurboTax Desktop, open your return and go to Online in the TurboTax header. (On a Mac computer, choose Share or Help.)

1. Choose Send Tax File to Agent.
2. You will see a message explaining what the diagnostic copy is.  Click Send on this screen and wait for the Token number to appear.
3. Reply to this thread with a screenshot of your Token number (this avoids Community filters for numbers with a dash) and tag (@) the Expert requesting the token from you.
4. Please include any States that are part of your return - this is VERY important.

We will then be able to see the same experience you are having. If we are able to determine the cause, we'll reply here and provide you with a resolution.