199A Reminder for Fiscal-Year Entities

As we discussed in our seminars, when a taxpayer receives a Schedule K-1 from a fiscal-year entity with a year that began prior to January 1, 2018 and ended during 2018, the income (or loss) on the Schedule K-1 is used to compute the taxpayer’s 2018 qualified business income, to the extent that it is otherwise eligible for the qualified business income deduction.

However, if the entity that issued the Schedule K-1 did not include the new information and codes related to the §199A deduction on the Schedule K-1, the taxpayer who receives the Schedule K-1 cannot take the qualified business income deduction for that income, unless the entity amends its return to include the §199A information on the Schedule K-1.