Schedule E glich with QBI and Royalty Income

[MJJ57]

TTB 2019, I entered 1 rent (land only lease)and 8 mineral & gas royalty incomes.  The last two entries of royalty income, even though I checked "NO" to the QBI question, it is creating QBI worksheet for the last royalty entered on Schedule E page 1, Copy 4 and flagging error that "link to the QBI worksheet must be entered".  Also flagging Form 1041 line 20 that QBI does not equal amount on Workshe 8995"  

I have deleted and reentered entries and this keeps happening.  

I also notice that on the Schedule E worksheets that all of my income from these entries are classified as non-passive.  They are PASSIVE.  Can this be changed?

[Anonymous_ · Accepted solution]

You  might want to contact Support (link below) for this issue. There have been problem reports with respect to Form 8995 and certain dividends; your scenario could be related to the reports.

https://ttlc.intuit.com/community/using-turbotax/help/what-is-the-turbotax-phone-number/00/25632

[pmc1]

Were you able to get an answer to the above problem?  I am having the same issue, and I can't seem to get through to support

[DavidS127]

More information may help resolve your issue.  For example, what version of TurboTax are you using, what type of return are you preparing, and what entries are causing the issue?

@pmc1

[blw300zx]

I'm using TurboTax Business 2019 - preparing a 1041 for an estate.

I've entered royalties that are passive and Turbotax is giving me the error that "link to QBI Wksht must be entered" even though I've told TT that this doesn't qualify for QBI.

Need help ASAP!

[DavidS127]

Royalties are generally eligible for the Qualified Business Income if the "source" is eligible. 

So, even royalties for a rental activity qualify if the rental activity is designated as a Section 162 trade or business or you are using the QBI Safe Harbor for rental activities.

If the royalties are earned by the trust itself, e.g., reported on a Schedule K-1 received by the trust, they are QBI eligible.

In Forms mode of your TurboTax Business (icon top right in blue bar), find the "source" form for the royalties in the list of forms on the left (i.e., Schedule K-1 received by the trust). Scroll down on that source form until you find the Qualified Business Income Deduction Worksheet.  There will be a line for "QBI worksheet to report".  Double click the "box" on that line and you'll create a QBI Component worksheet.  That will "clear" your error.

[blw300zx]

These are royalties from owning a mineral interest - they don't qualify for QBI.  If TT asks if they qualify and the user answers no there shouldn't be an error.  I tried to fix it the way you suggested but that created a new error...

[DavidS127]

Got to the Schedule E, page 1 in Forms mode, and scroll down to the Qualified Business Income Deduction Info (Review Each Activity Below) section.  See if the "Check if activity is NOT a qual trade/business" box is checked.  That box was not checked, on my form even though I had answered "No" to QBI in the interview questions.  At some point, I was able to get the "X" to "take" for that box.

If you still have a QBI Component sheet linked on line B of that section, you can double click there, select the sheet in the window, and click the Remove Link button.

See the KPMG analysis at this link regarding when royalty interests do (working interest) and do not (held for investment) qualify for QBI.