QBI and depreciation recapture.

[pgwilli]

According to my K-1, I had negative Section 199A PTP Income (line 20AD of the K-1).  However, when I sold all of my shares, I generated a much larger ordinary gain due to depreciation recapture. My research makes me think that the ordinary gain, not being "capital" in nature, qualifies for the 20% QBI deduction. However, TT does not have any place where I can enter the information. All of the QIB forms come up pre-loaded and none of the lines can be typed into. What am I missing?

[Critter]

If this is for 2018 or prior then make sure your program is up to date.   If this is for 2019 then the program will not be fully operational until sometime in January or early february. 

Contact TurboTax support and speak directly with a TurboTax support agent concerning this situation.

See this TurboTax support FAQ for a contact link and hours of operation -https://ttlc.intuit.com/questions/1899263-what-is-the-turbotax-phone-number
They are available M-F  from 5 a.m. to 5 p.m. Pacific time.

[Anonymous]

(4)Qualified publicly traded partnership incomeThe term “qualified publicly traded partnership income” means, with respect to any qualified trade or business of a taxpayer, the sum of—
(A)the net amount of such taxpayer’s allocable share of each qualified item of income, gain, deduction, and loss (as defined in subsection (c)(3) and determined after the application of subsection (c)(4)) from a publicly traded partnership (as defined in section 7704(a)) [2] which is not treated as a corporation under section 7704(c), plus
(B)any gain recognized by such taxpayer upon disposition of its interest in such partnership to the extent such gain is treated as an amount realized from the sale or exchange of property other than a capital asset under section 751(a).

from IRC Section 199A(e)

property and equipment would be a capital asset so 1245 recapture wouldn't qualify as QBI. 

[pgwilli]

Thanks.

[pgwilli]

It is for 2018, and the program is fully updated. Thanks.

[pgwilli]

I'm not a lawyer or a tax accountant, and I have never played one on television. However, I keep getting answers like the one below when I search the subject on the internet.

" Section 751 gain. With respect to a partnership, if section 751(a) or (b) applies, then gain or loss attributable to assets of the partnership giving rise to ordinary income under section 751(a) or (b) is considered attributable to the trades or businesses conducted by the partnership, and is taken into account for purposes of computing QBI."

I understand that everything on the internet is not always correct, but I have found multiple comments like the one above, written by various CPAs. 

[Anonymous]

there's a difference.  1245 would qualify as QBI if it is from a non-PTP.   

as a matter of fact PTP income is not QBI  but the code section and related regs puts it into a special category

so you get 20% of PTP 199A income as a QBI  deduction.    for regular partnerships if a taxpayer's taxable income is above a certain threshold they get 0% of its QBI as  a deduction (1065 box 20 code z).  for a PTP if a taxpayer's taxable income is above a certain threshold they still get 20% of the PTP 199A income as a QBI deduction (1065 box 20 code AD)

MFJ taxable income $800,000 all from a regular partnership QBI deduction $0

MFJ taxable income $800,000 all from PTP QBI deduction $160,000

QBI is defined as the “net amount of qualified items of income, gain, deduction, and loss with respect to any qualified trade or business of the taxpayer. Such term shall not include any qualified REIT dividends, qualified cooperative dividends, or qualified publicly traded partnership income.” IRC § 199A(c)(1).

you do have the option of consulting a professional tax advisor.        

[pgwilli]

Thanks, HACKITOFF. Your statement that PTP income is, by definition, not QBI, makes me feel confident that I am out of luck. My box 20 code AD number is negative, and the recapture income doesn't count. Thanks for that well worded answer.