From the Mail Bag:  What Can I Do If My K-1 Omits 199A Information?


Article Posted on 05/15/2019


Q.  I got a Schedule K-1 from a partnership that omitted the information I need to calculate my 199A deduction.

What do I do?

You have a big problem. Without a properly completed Schedule K-1, your Section 199A deduction is $0. Unfortunately, tax reform’s Section 199A deduction often confuses small-business owners and tax professionals alike.  Add to that fact the regulations from the IRS have been late getting out. 

Best option: You should request a corrected Schedule K-1 from the entity giving you the Schedule K-1 so you have the information you need to calculate your Section 199A deduction.

Not-so-great options: If you can’t get a corrected Schedule K-1, you have two options:

  1. Take no Section 199A deduction.
  2. File Form 8082 with your tax return and claim the Section 199A deduction.


You file Form 8082 with your tax return when you take a position on your tax return that is inconsistent with the Schedule K-1 you received.

Since the final regulations presume the Section 199A amounts are $0 when omitted, it is possible Form 8082 can rebut that presumption. The truth is, we do not know for sure.

You can determine qualified business income, but not W-2 wages or unadjusted basis immediately after acquisition of qualified property, from the other information on the Schedule K-1. Therefore, the Form 8082 option is likely available only if you are under the Section 199A taxable income threshold ($315,000 on a joint return or $157,500 for all other filing statuses).

Amended return. If you did not take a Section 199A deduction and you eventually get a corrected Schedule K-1, you can claim the deduction on an amended return and obtain a refund.
 

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