Question

Partnerships report qualified business income (QBI) on Schedule K-1 and must also:

a. Reduce ordinary income on page 1, Form 1065 by 20%

b. Calculate the QBI deduction for each partner on their Schedule K-1

c. Make adjustments on the partnership's balance sheet on page 5, Form 1065

d. Attach a statement to each Schedule K-1 so each partner may calculate their QBI deduction

Answer 1

Option - 'B'; Calculate the QBI deduction for each partner on their Schedule K-1

If the taxpayer receives a Schedule K-1 (Form 1065) with Section 199A Income in Box 20, Code Z, that income amount may be subject to certain deductions to determine the Qualified Business Income (QBI) from that business. Items that reduce QBI from a partnership are the following:-

* Deductible part of self-employment tax

* Self-employed simple and qualified plans

* Self-employed health insurance deduction

* Section 179 deduction

* Charitable Contributions

* Unreimbursed partner expenses