Talking with TaxSpeaker: Video 42
1. A shareholder in a Sub S receives automobile expense reimbursements in a non-accountable arrangement reported on a 1099-Rent.Does that income qualify for QBI? Conversely, that shareholder has expenses related to the acquisition of his stock from a former shareholder; goodwill amortization and acquisition interest. Do those items offset QBI?
2. A client gives a rent reduction for off duty police officers if they live in his building and if they make themselves available for any security situation on premises 24/7. Does he have to give them a Form 1099-Misc for the reduction amount?
3. A Single member LLC elected to be an S Corporation in a prior year. Now with the QBI deduction we are considering revoking the S election and we want the single member LLC to be treated as a sole proprietor. Taxpayers income is less than 315,000. When the S corporation is revoked should the taxpayer also file form 8832? Is there concern that the single member LLC will be treated as a regular C corporation or have created a liquidation?
4. As the preparer of an S Corp return, am I responsible for determining if the income of the S qualifies as QBI? If so, and I determine that it does not qualify as QBI, then I would not include any information on the K-1, correct?
5. In a partnership or S-Corp if one of the partners qualifies for QBI and the other partner does not how would you handle the K-1’s. The one that qualifies gets the QBI information and the other one would get a note to say they do not qualify?
6. Is there a way for an S Corp to retroactively reimburse a shareholder for health insurance for a prior year in which the health insurance was neither reimbursed nor added to the W2 total? If so, what is the time frame for this reimbursement and how would it work? For example, we have a S Corp shareholder who had unreimbursed health insurance in 2017. Can we reimburse them in 2019 and add it to their 2019 W2 as shareholder insurance so they can claim it on line 29 of their 1040?
7. On an S Corporation, our tax software (Lacerte) seems to be calculating the qualified business income without regard for Section 179 deduction. My issue : When calculating the Qualified Business Income - Lacerte seems to calculate without regard to deducting section 179. Lacerte software is calculating the qbi income as just box 1 ordinary income. It is not subtracting the amount reported as section 179. Maybe this is because if you have multiple k-1's and there is a net of $ 0 business income you would not be able to take section 179.
8. When reporting wages on the K-1 (for QBI purposes), what "wages" are used (if you're looking at a W2)?
a. Box 1 -- which might include health insurance for a Sub S Shareholder
b. Box 5 -- which wouldn't include Health insurance, but would include pension deferrals or a combination of both
9. Does an S Corp that is a member of an LLC taxed as a partnership pay SE tax on the LLC K-1 income?
10. Does an S Corp that is a member of an LLC taxed as a partnership pay SE tax on the LLC K-1 income?