R1: Items from Other Entities

Question 1

Item that is an allowable deduction in a partnership and also included in an individual’s tax return

Answer 1

Guaranteed payments to partners (salaries)

Question 2

QBI Formula

Answer 2

QBI x 20%

Question 3

SSTB

Answer 3

Accounting, law firms, doctors

Question 4

Qualified Trade Business or SSTB

Answer 4

Treated the same for purposes of QBI deductions as long as it under the threshold

Question 5

Specified service trade or business

Answer 5

W-2 and property limits apply

Question 6

Limits to QBI

Answer 6

Lesser of: QBI x 20% 20% of taxable income in excess of net capital gain

Question 7

Distributions made by trust

Answer 7

• Taxable to the recipient - Trust issues a Form 1041 and a K-1 to the recipient

Question 8

Gross income of a partnership or S corp

Answer 8

Net income (loss) x percent ownership

Question 9

QBI specified trade or business - phase out $ amount

Answer 9

Any income from a specified trade or business over $213,300 is not eligible for any QBI deduction

Question 10

Phase-out calculation for QBI for a qualified trade or business

Answer 10

Phase out range: = 163,300 - 213,300 (single rates)

Example: tentative QBI deduction

$80,000 x 20% = $16,000

W-2 wage limits = $20,000 x 50% = 10,000

$16,000 - 10,000 = $6,000 excess amount

Phase-in percentage:

$185,500 taxable income - $163,300 = $22,500

$22,500/ $50,000 (phase-in range) = 45%

$6,000 excess amount x 45% = 2,700 reduction amount

$16,000 - 2,700 = $13,300 reduced QBI deduction

Question 11

What is a guaranteed payment?

Answer 11

A guaranteed payment is a salary or other payment to a partner that is not calculated with respect to partnership income

Question 12

Section 1245 and 1250 Gains

Question 13

1120S separate reporting items

Answer 13

• Gains/losses from the sale of collectibles