Hi,

We have reached out to the IRS to find out how QBI should be reported on Schedule K-1 and have not gotten an answer.  Consequently, we designed our products with flexibility at both the entity level and the individual level.  Also, we found that K-1's received from competitor products were inconsistent in their reporting of QBI being offset by section 179.  In the end, the individual needs to reduce section 179 by QBI.

Here is an exerpt from IRS Publication 535:

Determining your qualified business income. Your QBI includes items of income, gain, deduction, and loss from any trades or businesses (or aggregated trade or business) that are effectively connected with the conduct of a trade or business within the United State. This includes income from partnerships (other than PTPs), S corporations, sole proprietorships, and certain trusts that are included or allowed in determining your taxable income for the year. It also includes other deductions attributable to the trade or business including, but not limited to, deductible tax on self-employment income, self-employed health insurance, and contributions to qualified retirement plans.

We provide an option at the entity level (partnership and S corporation) to not have QBI reduced by Section 179.  Please refer to the followng screen "Other Schedule K-1 Items".  Towards the bottom of the screen there is a box check for "Exclude section 179 deduction from QBI".  At the individual level within each of the K-1 screens and in the QBI sections, we provide a field that says "Section 179 if not already deducted from QBI".

Thank you,

Mike