Scenario Analysis
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      Qualified Business Income (QBI) Deduction

      Any scenario created by copying a scenario generated by the original tax return will carry with it any QBI deduction from line 13 of Form 1040 as reported on the return. 


      To calculate the new QBI deduction for your scenario, enter the appropriate information and clear the override in the “QBI Deduction (Calculation Override)” field outlined in red below within the QBI Deduction Calculation section.


      QBI Override

      Once that QBI override is clear, the QBI deduction can be calculated in one or two places depending on the source of the QBI.

      1. Schedule C Entities Worksheet:

        QBI and the QBI Deduction arising from Schedule C business activities is calculated in Holistiplan automatically based on the entries made in Schedule C. To model Schedule C business activities, you can review our article on Modeling Schedule C Income.


      2. QBI Deduction Calculation Section:

        For QBI Sources outside of Schedule C Entities, the system cannot currently calculate any part of QBI automatically. Instead we suggest using an external calculator to determine the total QBI, which you can enter here in order to calculate the QBI Deduction.

        QBI from REIT (Real Estate Investment Trust) Dividend Income/PTP (Publicly Traded Partnership Income, and/or DPAD (Domestic Production Activity Deduction) under 199a(g) will be entered in the respective fields outlined in blue below.

      REIT, PTP, DPAD 199ag

      If your client does not have any Schedule C business activities, you will simply enter the QBI (generally equal the net income from those Schedule E activities) as QBI in the "Qualified Business Income (Override)" field outlined in green below. Note that the entries in the "Allocable Share W2" and "Allocable Share Unadjusted Basis" fields and the "Specified Service Business?" checkbox are do not factor into the QBI calculation unless an an entry is made in the outlined field below.


      Sch E QBI Override

      Note: If your client has both Schedule C and Schedule E business activities with QBI, you will need to combine the QBI from those Schedule C entities and Schedule E entities in the "Qualified Business Income (Override)" field outlined in green above.


      In the above example, we have the existing $47,900 of QBI from Schedule C entities, plus an additional $30,000 of QBI from Schedule E activities. Those two are combined into the "Qualified Business Income (Override)" field and the total of $77,900 of QBI is used. You can use our Field Notes feature to keep track of combined figures in that field like in the example below.




      Why do you have to combine those amounts like described above? While Holistiplan can automatically calculate the QBI deduction for Schedule C activities now, that automation capability is not currently available for Schedule E. Since some taxpayers will have QBI from both Schedule C and Schedule E, the "Qualified Business Income (Override)" field should be used when both Schedule C and E activities are involved, and as an input for Schedule E QBI when no Schedule C activities are involved. If a taxpayer's QBI consists only of only Schedule C income, Holistiplan will calculate QBI for you and no entry here is required.

      If you have any questions along the way about how to model the QBI Deduction in Scenario Analysis, please contact a member of our Support Team!