TutboTax Computation of QBI income incorrect

[AcreageP]

I am trying to understand how TutboTax calculates QBI income (199A Worksheet by Activity - line 1a). I am unable to find anywhere within any of the forms where this calculation is done.

My scenario is as follows:
I sold a few parcels of vacant land (no depreciation) on installment sale in 2023 that was owned by my LLC (partnership) for less than a year (short term gains).
As a result, I have the following income types.
1. Installment income
2. Interest income
3. Late fees
4. Payment processing fees

As per the IRS definition of what to include in QBI income (IRS QBI Income), all of the above should be included as QBI income with the exception (possibly) of the capital gains (Installment income).

However, the K1s that TurboTax produces, shows huge differences between the Ordinary Income (Box 1) and the QBI Income (Box 20/Z Statement A).
In one K1, Box , for example,  has $61,495 while the QBI Income (Box 20/Z Statement A) for that K1 has $33,966.

Please clarify for me how TurboTax computes Box 20/Z Statement A.

Thanks

[Mike9241]

sorry this is what section 199A says is excluded from QBI

(B)Exceptions
The following items shall not be taken into account as a qualified item of income, gain, deduction, or loss:
(i)Any item of short-term capital gain, short-term capital loss, long-term capital gain, or long-term capital loss.

(ii)Any dividend, income equivalent to a dividend, or payment in lieu of dividends described in section 954(c)(1)(G). Any amount described in section 1385(a)(1) shall not be treated as described in this clause.
(iii)Any interest income other than interest income which is properly allocable to a trade or business.

you did not read far enough down on the iRS webpage

QBI does not include items such as:

• Items that are not properly includable in taxable income
• Investment items such as capital gains or losses
• Interest income not properly allocable to a trade or business
• Wage income
• Income that is not effectively connected with the conduct of business within the United States
• Commodities transactions or foreign currency gains or losses
• Certain dividends and payments in lieu of dividends
• Income, loss, or deductions from notional principal contracts
• Annuities, unless received in connection with the trade or business
• Amounts received as reasonable compensation from an S corporation
• Amounts received as guaranteed payments from a partnership
• Payments received by a partner for services other than in a capacity as a partner
• Qualified REIT dividends
• PTP income

[AcreageP]

Actually I did. If I leave out the cap gains, it still does not add up. I tried to exclude/include all sorts of combinations of my income types to try to arrive at the TT QBI income value to no avail.

I'd love to see the worksheet that TT uses to come up with their figure.

[Mike9241]

there should be a QBI component worksheet. however, if you use online, you probably can't view it until the fees are paid.

for a K-1 there is a separate section where the QBI info from the K-1 needs to be entered

QBI has many limitations, the computation is done on form 8995

[AcreageP]

Thanks for the replies - I do appreciate them.

I am using a paid for Windows desktop version of  TT Business and I am doing a 1065 partnership return.

There is no QBI component worksheet in my forms mode. The QBI component worksheet is in my personal return with the QBI Income entered from the KI. I have no issues with this.

The issue I have is with the computation of the actual QBI Income on the Partnership return. How is this being computed?

On the Partnership return, all I see is the 199A Worksheet with the QBI Income listed on line 1a but like I said before I see no way of where this computation is being done to arrive at this number.

Regarding form 8995, that is on my personal return where the QBI Business Deduction is being done from the QBI Income listed on the K1.  I have no issues here as well. My issue is with the computation of the actual QBI Income on the partnership return.

Thanks again.