How does Turbotax add PTP ordinary gain into the QBI Deduction? It does QBI Ded for REIT Divs and $ in K-1 Box 20AD but not for ordinary gains from non-SSTB PTP sales.

TwoTimes1 · ‎June 7, 2019

I had ordinary gains from complete sale of two non-SSTB PTP (also separate capital gains). Turbotax entered the ordinary gains into Form 4797. Turbotax calculated the QBI Deduction for the $ in K-1 Box 20 code AD but did not include the ordinary gains in the QBI Deduction calculations. The two QBI Deduction Worksheets and the 1040 Worksheet do not allow manual entries.

nexchap · ‎June 7, 2019

This looks like a bug in TT. Go to Forms mode and select the K-1 Partner worksheet for the MLP that has the Ordinary Gain. Scroll down to Section D. The first question says "Does this K-1 include a Section 199A Business?". ''No' is checked by default. Switch it to 'yes' and you'll see the rest of Section D populate. You'll also see the Ordinary Gain is put to use for the QBI calculation.

Note that if you switch back to interview mode, and go edit that K-1 again, you'll see several questions suddenly added to the end of the interview, specifically dealing with using the Ordinary Gain for QBI. That's what suggests to me that its a bug -- it looks like TT hasn't added the prompt yet to ask about this during the interview.

EDITED TO CORRECT:

This solution doesn't always work correctly. As pointed out below by tiger425, Section D is the correct place to handle.

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View solution in original post

TwoTimes1 · ‎June 7, 2019

Spot On immediate fix. TT needs to add the prompt in the interview. I have a concern that comes from the increased knowledge made available by your fix, but I'll have to do a new question.

eg75 · ‎June 7, 2019

Thank you! It's a great suggestion that I don't think I tried. Unfortunately, the box is checked. As, TT's YouTube video suggests, the formula for taking the deduction is complex. Apparently, I don't qualify. I should close this for now, I think. TT may be working as it should.

eg75 · ‎June 7, 2019

Thank you! It's a great suggestion that I don't think I tried. Unfortunately, the box is checked. As, TT's YouTube video suggests, the formula for taking the deduction is complex. Apparently, I don't qualify. I should close this for now, I think. TT may be working as it should.

tiger206 · ‎June 7, 2019

I have spent some time playing around with this and disagree with the above answer. Yes, go to Section D, but do not check Yes. Even though checking Yes populates the sheet and attempts to include your Sec 751 gain, this is not the right place to do it and it wont work if you are over the thresholds unless you can provide the PTP W-2 info that allows the deduction. Sec 751 gains are includable in "Qualified PTP Income" and the place to add them in on Section D is down at N.2 Adjustments. If you put them in there, they will flow to the right place along with the REIT income.

nexchap · ‎June 7, 2019

@tiger425 I believe you're right. I've corrected the answer.

**Say "Thanks" by clicking the thumb icon in a post
**Note also, I'm not a Tax Preparer/CPA. Just a volunteer, seasoned, TurboTax user.
Use any advice accordingly!

How does Turbotax add PTP ordinary gain into the QBI Deduction? It does QBI Ded for REIT Divs and $ in K-1 Box 20AD but not for ordinary gains from non-SSTB PTP sales.

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