Level 15
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What Lacerte is doing is correct.  §199A can only take into account what is allowed in the current tax year.  To the extent §179 is suspended and PAL disallowed, these amounts cannot be taken into account for purposes of §199A.  That is the reason why Lacerte added back the suspended §179.

The key is whether your client has sufficient active ToB income (which includes compensation) for §179 to be allowed since the income from S-corp is passive.  Since Lacerte has $26k (-24k S-Corp Loss + $50k §179 Disallowed) for QBI from the S-Corp, that tells me only $24k of the §179 is allowed.  But this doesn't make sense because the net ToB income from the commercial alone is already $25k, which means at least $25k of §179 should have been allowed - of course, unless there is $1k of business loss you didn't tell us about.

Let's change your numbers a little for illustration:

  • Commercial Rental QBI: $25k
  • S-Corp (Passive): $50k ordinary income + $74k §179
  • Wages: $30k

Here's how the numbers should play out in Lacerte:

  • §179 Allowed: $25k + $30k = $55k
  • §179 Disallowed: $74k - $55k = $19k
  • S-Corp Income/Loss: $50k - $55k = ($5k) = $50k - $74k + $19k
  • PAL: ($5k) since it's smaller than $25k of passive income from commercial rental
  • F.8995: $25k from commercial rental + ($5k) from S-Corp = $20k in Total QBI
Still an AllStar

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