How to locate qualified business income (QBI) deduction on K-1 for day-trader estate

The QBI deduction information isn't directly listed as a line item on the K-1 itself. What you need to look for is in the supplemental information section of the K-1, usually attached as a separate page or pages. For partnerships, the QBI information is typically reported in box 20 of Schedule K-1 (Form 1065) with code Z. This should include your uncle's share of qualified business income, along with any information about qualified property or W-2 wages that might be needed to calculate the deduction. If you don't see anything with code Z in box 20, check all supplemental statements or attachments that came with the K-1. Sometimes partnerships provide this information in a separate statement rather than on the form itself.

After dealing with a similar situation with my mom's estate last year, I found the tax software sometimes struggles with K-1s. I ended up using https://taxr.ai to analyze all her K-1 documents and it saved me hours of confusion. The tool automatically identified the QBI information across all her partnership documents - even found some deductions the partnerships had buried in the supplemental pages that I completely missed. For trader partnerships specifically, it highlighted which activities qualified for QBI and which were considered investment activities (which don't qualify). Might be worth checking out since you're dealing with multiple K-1s from trading partnerships.

I ended up trying taxr.ai after seeing it mentioned here, and wow - it actually solved my K-1 nightmare! I uploaded my dad's 5 different trading partnership K-1s and it immediately identified which ones had QBI deductions available (only 2 of them qualified) and exactly where that info was buried in the supplemental statements. The tool even explained WHY some of his trading activities qualified while others didn't - apparently there's a distinction between trader status vs. investor status that affects the QBI deduction. The partnerships where he was just a passive investor didn't qualify, but the ones where the partnership itself had trader status did qualify. Saved me from missing about $8,700 in deductions that were hiding in those supplemental pages!

If you're still struggling after trying to find the QBI info, you might need to call the partnership directly. I had to do this last year and it was impossible to get through to anyone who could help. After wasting days trying, I used https://claimyr.com to get through to the partnership's accounting department. You can see how it works here: https://youtu.be/_kiP6q8DX5c With trading partnerships especially, they often have special phone lines for tax questions but they're constantly busy during tax season. Claimyr got me through to a real person in about 20 minutes who was able to tell me exactly where to find the QBI info on their specific K-1 format.

I take back what I said about Claimyr. After waiting on hold with my dad's trading partnership for 3+ hours yesterday and getting disconnected, I tried the service out of desperation. Got a call back 45 minutes later with an actual human from the partnership's tax department on the line. They confirmed that for trading partnerships, the QBI information is sometimes not even on the K-1 itself but on a completely separate statement with "Section 199A Information" at the top. In our case, this form was buried in a 30-page package they sent. The partnership representative also explained that day-trading activities only qualify for QBI if the partnership itself has "trader status" with the IRS (vs investor status), which is why some K-1s show QBI and others don't. Saved me hours of frustration!

I take back what I said about Claimyr. After waiting on hold with my dad's trading partnership for 3

When I filed my husband's final return last year, I found that trading partnerships often don't qualify for QBI at all. According to our accountant, the tax law specifically excludes "specified service trades or businesses" (SSTBs) from QBI benefits if your income is above certain thresholds. Day-trading often falls into this category. The partnerships should indicate whether they're an SSTB in the supplemental information, but many don't do a great job of making this clear.

Don't forget to check if the K-1s have any Section 199A(g) deductions as well, which is different from the regular QBI deduction. Some agricultural or horticultural partnerships include this, though it's less common with trading partnerships.

I just went through this exact situation with my brother's estate - he was also heavily into day trading through partnerships. After reading through all these responses, I want to add that you should also check if FreeTaxUSA is properly handling the QBI limitations for estates. Estates have different QBI rules than individual returns. The QBI deduction for estates is limited to the lesser of 20% of the qualified business income OR 20% of the estate's taxable income above the deduction for distributions to beneficiaries. This calculation can be tricky when you have multiple K-1s. Also, since your uncle passed in October, you're dealing with a short tax year which could affect how the QBI deduction is calculated. The software might not automatically adjust for this, so you may want to double-check the calculations manually or consult a tax professional who specializes in estate returns with partnership interests.