Section 199A

[BBmack]

2018 return filed in July 2019. The Lacerte program used all partnership business losses as offset to 199A deduction. After that Lacerte, in an update, changed it so the program only deducted the partnership  deductible losses against other 199A income. I caught this  while preparing the 2019 return.  The program is carrying forward 2018 partnership non-deductible losses to 2019 where they are now deductible. Therefore, the 199A deduction is being reduced again in 2019 by the same number used in 2018.

I don't see any way to over ride this offset and the net tax difference is too small (less than $100) to amend 2018. Anyone else have this issue and how did you handle it?

[itonewbie]

Could you please give more specifics or provide some numbers?

Lacerte has always allocated losses to offset other qualified businesses with net income, not QBID.  This hasn't changed.

[BBmack]

Okay, on the 2818 return filed in July 2019, the program took all Sec. 199A partnership losses as an offset to the 199A calculation even though some partnership losses were not deductible due to passive loss rules. Partner is a Ltd partner. When I looked at the 2018 return while doing 2019 I found that the program had changed 2018 to only use the deductible psp losses in 2018 and carried the non-deductible  2018 psp losses forward to use in 2019 to the extend they are deductible ln 2019.

[itonewbie]

What you now describe is different from what you stated in the original post.

QBI is defined as income, gain, deduction, and loss with respect to any qualified trade or business of the taxpayer.  As stipulated in the regs, only income, gain, deduction, and loss to the extent allowed in the current tax year can be into account for purposes of QBI.  This means amounts suspended for §179 and PAL would not be taken into account.

Are you sure suspended PAL was used to offset positive QBI from other qualified ToB?  I don't recall this being a problem last year.

[BBmack]

Yes, I checked and it used all suspended losses in the original filed return. That is how I caught it in 2019.