Form 1041 returns ignore Sec 199A qualified REIT dividends

[Thorgils]

I'm using TurboTax Business (desktop) to crate Forms 1041 for several trusts which (my research suggests) qualify for a QBI deduction based on REIT dividend entries sourced from Box 5 in Forms 1099-DIV.  The TT logic ignores those entries.

The workaround I've found is to add a Form "QBI ded summary" to the return and click on the Line 9 (Total REIT dividends) entry.  The REIT dividends show up, the QBI amount calculates, and is transferred correctly to Line 20 of the Form 1041.

But a copy of Form 8995 is supposed to be included in the return to support a Line 20 entry.  And while the edit of "QBI ded summary" correctly populates Form 1041, it doesn't automatically produce a Form 8995.  But no worries: the entries from the the QBI ded summary can be easily used to create a Form 8995 by manually overriding the relevant fields to complete Lines 6-17.

However, when I come to review the completed return, I can see no route to including the Form 8995 in an efiled submission.  Is there a way to do so?  Or, if not, will TurboTax be fixing this omission of Sec 199A REIT dividends from Form 1041 returns?

[MaryK4]

If you are reporting the REIT 199A dividends on the K-1s for the beneficiaries, they can claim the QBID on their personal income tax returns, in which case, the trust would not deduct and report on Line 20 of the 1041 so no 8995 is needed.

The trust or estate must report the apportioned allocable share of any REIT dividends to each beneficiary on Statement A, or a substantially similar statement, attached to Schedule K-1. Section 199A dividends do not have to be reported by trade or business and can be reported as a single amount to beneficiaries. Section 199A dividends include dividends the trust or estate receives from a REIT held for more than 45 days, for which the payment is not obligated to someone else, is not a capital gain dividend under section 857(b)(3), and is not a qualified dividend under section 1(h)(11), plus any apportioned qualified REIT dividends received from a RIC.

[Thorgils]

Thank you.  Since none of my returns made distributions in 2024, no K-1s are involved (although I suppose I could create them just to pass through the QBI deductions).  So the REIT dividends should contribute to a deduction at the fiduciary level.

But I see that my problem here was that the income of the trust I'm currently working on exceeds the level at which a Form 8995 is applicable; I need to use a Form 8995-A.  And when I include a Form 8995-A in the return, it automatically populates and gets included in the efiled return.  So . . . problem solved. 

But I do think that the Form 1041 interview around such aspects would greatly benefit from improvement, and I do think that the current logic is incorrect in deciding, under the QBI section of the interview, that my cases don't qualify for a QBI deduction at the trust level (when the REIT income isn't being distributed to the beneficiaries).