Section 179 and QBI 199A (Code Z)

[Anonymous]

I have a simple scenario with an LLC partnership and just ordinary income (no real estate, oil, etc.) it's under the $157/315K threshold.

I'll generate Schedule K-1 with Code Z. I also have Section 179 deduction in Line 12. For TT step-by-step question "We need some info about your 199A income", I pick ordinary income. Should the amount I enter exclude section 179 deduction (so it would be same amount as my Line 1)?

I read this in another forum post (but unsure if allocate entire section 179 to QBI means that you do not deduct the 179 from QBI):

...if the Section 179 deduction  was used on depreciable property that is used to produce qualified business income.  More often than not, the answer to that question is yes.  If the item in question is 100% business use, allocate the entire Section 179 to QBI.  

My item is 100% business use and Section 179 is depreciable property.

PS: I read I need Code Z* and STMT... will TurboTax generate the statement?

[tagteam]

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@Anonymous wrote:

PS: I read I need Code Z* and STMT... will TurboTax generate the statement?

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TurboTax Business will generate the statement. Which version are you using?

[Anonymous]

Thanks for confirming @tagteam. I'm using Deluxe for my personal portion. I didn't get Business this year because what I am doing is so basic it takes about 10 minutes to fill out the 1065.

If anyone knows of a location with a generic QBI Statement template, I would REALLY appreciate it.

And can anyone else confirm my interpretation is correct on section 179? 

I found this: https://www.irs.gov/pub/irs-utl/2018ntf-pros-and-cons-of-full-expensing-and-section-179.pdf and it notes: "Code §179 reduces taxable income and therefore amount eligible" which I translate to mean that it reduces your ordinary income...
for the QBI.

[Anonymous]

In case anyone's wondering, I found a template in the 1065 instructions. I'm just going to copy and paste it into a document to print it.

[tagteam]

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@Anonymous wrote:

In case anyone's wondering, I found a template in the 1065 instructions. I'm just going to copy and paste it into a document to print it.

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I take it you are referring to the one below.

[pamso]

I have the statement you refer to filled out on my K-1 but I cannot figure out how to apply it to the tax return. I enter the Ordinary business income in box 20 Z but then it tells me I need Statement A filled out without any way to find or fill out Statement A. Last year was much easier. 

[DavidS127]

Use the TurboTax K-1 interview questions to enter the box 20 code Z from your Form 1065 K-1.  You don't have to put an amount, just the code Z.  But, it is very important that you Continue to the Section 199A questions that follow.  In particular, there is a screen "We need some more information about your 199A income or loss".  This screen must be completed in order for your box 20 code Z information to be correctly input into TurboTax.

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.

[Anonymous]

Yes, that's the one I was referring to. I also read in IRS form that Code Z.

Also Turbo Tax is confusing as far as how to enter the items from STMT (I see another thread where people are asking and the question is unanswered). So I just defaulted to K-1's that do not include Code Z* STMT and instead created ones that are Code Z (that's what Schedule K-1 instructions specify) and I am including a statement anyway in case IRS wants to see the breakdown. There's no difference in the taxation so that seems good enough and aligned with what the official instructions state.

[5727]

Schedule K-1 - Turbo is asking me to fill in an amount on line 20 Other Information for Code Z Section 199A information.  The code is typed on the form as follows:  Z* STMT.  What does that mean?  My daughter & I are in a real estate investment partnership and our business taxes are prepared by a Tax preparer out of state.  We are provided with the Schedule K-1 after our business taxes are prepared by them.  I personally have a rental property that I have had for over 20 years and do not intend to include it in our partnership.  Have I inadvertently answered something wrong in Turbo and intermingled my rental property with the partnership.

I need help.  THANKS