The K-1 from the Sub S corporation when inputted into the form 1040 does not generate a prompt to calculate the Qualified Business Income Deduction. Why not?

[jdmeehan40]

The Sub S is for commercial rental real estate activity and the taxpayer actively participates in its operation.  However I wonder if the rental worksheet generated when preparing the Sub S return is recognized by the turbo tax software that a Qualified Business Income Deduction is applicable when the 1040 is prepared or does the Turbo Tax software automatically negates the QBID because it is rental real estate? 

[DanielV01 · Accepted solution]

It is calculated through the interview.  For starters, the QBI calculation is complex, especially if the individual is above the 157,500 thresholds if single, married filing separately, or head of household, or 315,000 if Married Filing Joint.  But these are the steps needed to help the program calculate QBI correctly:

1. Under Wages and Income, scroll down to the Subheading Business Income, and select K-1.  
2. On the screen Choose Type of Activity select Rental Real Estate, and then answer the appropriate questions about being a Real Estate Professional, Active Participation, and Special Handling.
3. On the screen Check Boxes That Have an Amount, you should select Box 17 info.
4. You should see codes V and W on the K-1 (if you do not, this is would be one reason why the QBI does not calculate.  This information must be on the K-1 for QBI to calculate).
   
5. Select any that apply on the screen Other Situations, and any information to the question Did this business receive qulified payments from a cooperative.
6. Answer the question about anticipated income on the next screen, We're almost done.  If anticipated income is below the threshold, QBI will calculate after that screen.  If above, you will provide additional information, and QBI will calculate according to the final results.
   

Here is an FAQ regarding QBI with regards to rental income:  https://ttlc.intuit.com/replies/7122193