This is new, yes. The Tax Cuts and Jobs Act created a new potential 20% deduction on pass-through income, which is income that comes from a trade or business that is not a C Corporation. Those who have S Corporations (such as yourself) are taking advantage of this deduction to lower their tax liability. While you can skip this information, I can promise you: you don't want to skip it. Here's what the codes mean and what to enter on Schedule K:
-
V, QBI Income. This is the net income generated by your S-Corp, minus any capital gains, and if you have any REIT dividends. Generally speaking, code V is the same as Box 1 and/or Box 2 (rental income)
-
W, QBI Wages. This is the amount of wages the S Corp paid to both officers and employees. Although this number gets passed-through to each of the shareholders, a high number is a good thing, because if you have S-Corp shareholders with higher income, it could help determine how much QBI deduction they can receive
-
X, UBIA property. UBIA stands for Unadjusted Basis Immediately After Acquisition, and refers to the price of property still in your S-Corp's possession that is not at least 10 years old or has not been depreciated out if older than 10 years old. Like wages, UBIA property can help determine the amount of QBI deduction for higher earning taxpayers.
-
Y, REIT dividends. While REIT dividends are not considered to be QBI, they are included for the Section 199A deduction.
It is worth your while to make sure these are reported correctly on Schedule K, so that they pass through to the shareholders on their Schedules K-1. Without those numbers and codes, the QBI deduction cannot calculate on their return.
For more information on this deduction, see the following FAQ: https://ttlc.intuit.com/replies/7019998
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
