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Screen K1T-3, Schedule K-1, 1041 - Credits, QBID, PAL, Carryovers (1040)
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Credits and Recapture
Pass-through entity taxes (State use only)
Enter a pass-through entity tax (PTET) credit for a 1040 return.
Qualified Business Income Deduction
Section 199A income
Enter the amount received from Form 1041 Schedule K-1 The amount entered will be adjusted for any passive activity adjustments to arrive at qualified business income to use on the Qualified Business Income Deduction worksheets. The K-1 Reconciliation Worksheet – Qualified Business Income included in the K1 Reconciliation group supports the calculated amount. If your calculated amount is different from the Schedule K1 and the default amount, use the
Qualified business income (Force)
field on this screen.Portion of QBI allocable to qualified payments received from cooperative
If the farming business is a member of a specified agricultural or horticultural cooperative, enter the qualified business income allocable to qualified payments received from the cooperative. The amount in this field is on Form 8995-A – Schedule D – Special Rules for Patrons of Agricultural or Horticultural Cooperatives. See Publication 535 for more information.
Domestic Production Activities Deduction under section 199A(g) allocated from cooperative
Enter the DPAD allocated from the agricultural or horticultural cooperative, if any. The amount is used on Form 8995-A, line 38.
Regulation 1.199A-4 aggregation group number
To include this trade or business in a grouping for the qualified business deduction under the rules of Regulation Section 199A-4, enter a group number. Use the same code for all trades or businesses in the same group. UltraTax CS combines all group members into one calculation. Form 8995-A, Qualified Business Income Deduction, Schedule B – Aggregation of Business Operations is produced only when Form 8995, Qualified Business Income Deduction Simplified Calculation is not used.
Passive Activity and Other Information
Passive activity code
Select the appropriate activity type code. The passive activity code determines how the entries will be treated in the Income and Directly Allocable Deductions section. If you enter passive carryovers for an entity coded
3
or 4
, the activity will be treated as a former passive activity.Aggregation group
To include this activity in a passive group, enter the aggregation group number. Units with the same aggregation number are reported as one item on the statement worksheets for Form 8582. You must use the same passive code for all of the entities in an aggregation.
note
Non-passive activities (codes 3 and 4) cannot be part of an aggregate grouping. Use aggregation groups for Form 8582 passive activity purposes only. Use the same passive activity code for each member of an aggregation group. See Form 8582 instructions and IRS regulations for more information about proper groupings.
Reg. 1.469-4(d)(1) group
Enter a unique group number to include this activity in a Regulation 1.469-4(d)(1) grouping of a rental activity within a trade or business activity. When grouping activities under Reg. 1.469-4(d)(1), do not use a number that has been used in the Aggregation group field.
The entire group is nonpassive for reporting purposes. Each member of the activity must use passive activity code 3, that is nonpassive. Since the group is nonpassive, the group income does not report on Form 8582 and is not considered net investment income for Form 8960 purposes. The income or loss reports on the appropriate forms and schedules used regularly.
note
- Use Group disclosure code to make any required disclosures for the Reg. 1.469-4(d)(1) group.
- Use the aggregation grouping when the entire activity is considered rental real estate or other rental. Forms 8582 and 8960 will complete as necessary.
Group disclosure code
Enter the appropriate code applicable to this member of a passive activity aggregation group or Reg. 1.469-4(d)(1) group.
The code and the
Aggregation group
field are used to produce the statement required by Rev. Proc. 2010-13. Under Rev. Proc. 2010-13, written disclosure statements required to be filed with the tax return for the year in which two or more activities are grouped together for the first time (essentially serving as the election to group those activities), or for a year in which changes are made to existing groupings, including when a new activity is added to an existing group.note
- A disclosure is not required for pre-existing groupings that remain unchanged. After you start a grouping, you must disclose any change to the group, per Rev Proc 2010-13. Use careful tax planning when determining if and when to group activities. Consult Form 8582 instructions, Rev Proc 2010-13, IRS Publication 925, and Thomson Reuters Checkpoint for more information on grouping activities.
- You can use the group disclosure code for the aggregation group and the Reg. 1.496-4(d)(1) group. Do not use the same group number for one type of group that is already entered for another grouping.
Recharacterization of passive income
Net income from these passive activities will be recharacterized as nonpassive and will not be included in the worksheets of Form 8582, Passive Activity Loss Limitations. Passive activities with net loss will continue to be included as passive and appear in the worksheets on Form 8582. For more information on the recharacterization of passive income, see IRS Publication 925, Passive Activity and At-Risk Rules.
note
Net passive income recharacterized as nonpassive income from rental of nondepreciable property (code 1), equity-finance lending activity (code 2), or licensing of intangible property (code 5) will be treated as investment income for Form 4952.
Significant participation hours
Enter significant participation hours, if applicable, in this field.
- If an activity has fewer than 100 significant participation hours, the activity is considered passive. It is not considered to be a significant participation activity.
- If the activity has more between 100 and 500 total significant participation hours, the overall losses from the SPAs are treated as as passive. Overall income from these activities is recharacterized as non-passive.
- If activity has more than 500 total significant participation hours, the calculation is not completed for theSignificant participation hoursfield. UltraTax CS does not determine the passive or non-passive character of the entity or business. You must code the activities' character.
Include rental with active participation in Section 179 business income
Mark this field to have the income or loss from this activity included in the section 179 business income on Form 4562. The calculation of business income for section 179 purposes does not include the income from passive activities. To include the activity income, you must enter
2
for the passive activity code for rental real estate with active participation.Passive Activity Carryovers
Enter last year's regular and AMT passive loss carryovers for this activity. This information is proforma'd from last year's data, if applicable. If the AMT fields are blank, UltraTax CS assumes there are no AMT carryovers.To enter state-related carryover amounts, use the St CO screen, or use the State allocation spreadsheet.