Trust - Qualified Business Income (QBI) Deduction under section 199A


Notice: Historical Content

This is an archival or historical document and may not reflect current law, policies or procedures.

For Trust Filers Only:

If you are a trust filing Form 990-T and have unrelated business income, you may have Qualified Business Income (QBI) and may be allowed a QBI deduction under section 199A.

Refer to the Instructions for Form 1040, Line 9, and Chapter 12 of Pub. 535, Business Expenses (as applicable) to determine whether you meet the requirements for the QBI deduction. They also include worksheets to calculate the allowable QBI deduction.

For purposes of calculating the QBI deduction, the taxable income before the QBI deduction is the amount reported on line 36, Total of unrelated business taxable income before specific deduction, less the specific deduction permitted under section 512(b)(12) of the Internal Revenue Code.

Note:  For tax years beginning after December 31, 2017, the organization determines the unrelated business income separately for each unrelated trade or business, and the income for an unrelated trade or business cannot be less than zero.  Since a loss from an unrelated trade or business is not included in the unrelated business taxable income for the tax year due to application of section 512(a)(6), when calculating QBI, omit items of income, gain, deduction and loss from any unrelated trade or business that operated at a loss.  A loss from an unrelated trade or business will be carried forward to future years when the trust has income or gain from the same unrelated trade or business and will be used in those years in calculating the QBI.  Additionally, W-2 wages and unadjusted basis immediately after the acquisition (UBIA) of qualified property from an unrelated trade or business that operated at a loss for the current tax year are not used in calculating the limitation on QBI for taxpayers over the threshold.

Where to report the QBI deduction. Add the QBI deduction to any specific deduction allowable and report the total of these two amounts on line 37, Specific deduction. Attach a statement to the return identifying the amount of the QBI deduction claimed on line 37.