K-1 (1120-S) QBI Pass Through Entity Reporting Income (Loss) total does not equal Box 1 on K-1

[Kell7]

I will preface this by saying that I believe I cannot aggregate because all the entities are SSTBs. The QBI Deduction is phased out from high income on this 2024 return. 

I have two schedule K-1s (Form 1120-S) for two main S-Corps lets call them number 1 and number 2.

They each have a value in Box 1 (and not in 2 or 3; so I know I don't have to split the K-1 for that reason)

On each, Box 17 has Code V;

Each has Statement A - QBI Pass-Through Entity Reporting. 

I created a separate K-1 for each entity, four on number 1 and six on number 2, so I have ten in total. They all appear in part II on schedule E. (Note: Last years return done by the acct. only showed the two main entities in Part II, and did not detail any pass-throughs and had different EINs than those on the K-1s. not sure why.) 

For main K-1 number 1, there are four entities, the main and three others, all SSTBs. All the Ordinary business incomes listed in the four combined, add up to Box 1 on the main K-1. No problem there.

! For main K-1 number 2, there is the main entity and five others. The main one's box is not checked for SSTB, it has a loss listed. All the others are marked SSTB and have positive numbers. All six of the Ordinary business income (loss) values added up, DO NOT equal the Box 1 on the main K-1. I cannot figure out why. It is different by about $800. IE checking against box 1 of the K-1, it does not match.

This pushes to schedule E p2 Part II eventually line 32. Then that to schedule 1 line 5 and is included in line 8 of 1040, making the added income $831 higher and changing the computed tax. This does not seem correct.

[Mike9241]

SSTBs are not supposed to be aggregated REG 1.199A-4(b)

(b) Aggregation rules—(1) General rule. Trades or businesses may be aggregated only if an individual or RPE can demonstrate that—

(iv) None of the trades or businesses to be aggregated is a specified service trade or business (SSTB) as defined in § 1.199A-5

assuming SSTB status for some of the activities last year, it seems the accountant did not follow the rules.

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Right. the sum of the parts should equal the whole. so contact the preparer for an explanation. we don't know any more than you do why the numbers do not add up. If your k-1s are incorrect then it's likely every other shareholder's has incorrect k-1s 

[Kell7]

So, I think that the Statement A QBI Pass Through Entity Ordinary Business Income amounts combined, do not add up the the number in box 1 of the main K-1, due to some kind of adjustment taken on a loss in one of the entities but I will follow up on that. I created a separate K-1 for each QBI entity, under the main K-1 name and EIN; but was putting the QBI income amount into Part III line 1 on the K-1, which was adding it to the original K-1 income in Part II of the Schedule E, incorrect. Once I removed the amount from Part III line 1 of the K-1, and put it only into Part III Section D1 (with the name of the pass thorough entity and its EIN #) with the W-2 wages and UBIA, then it seemed to correctly populate a QBI Component Worksheet for each. However, each of the additional K-1 still show up on Schedule E line 28; having income K-1 as 0 (column k). I am hoping this is acceptable. The two main K-1s are now the only incomes being combined to line 29a, which is believe is correct.