K1 Preparation for 199A with C-Corp Partners - Required or Not?

But doesn't the IRS get upset if you leave sections blank? I've always filled out everything just to be safe. Are you 100% sure this won't trigger some kind of automatic flag in their system?

The IRS doesn't get upset about omitting information that's not applicable to your specific situation. In this case, the 199A information is specifically designed for partners who can actually claim the QBI deduction, which C-Corps cannot. Automatic flags are generally triggered by inconsistencies or missing required information, not by appropriately omitting sections that don't apply to your specific filing situation. The key is to ensure you're completing all sections that are relevant to your partners' tax obligations.

Does it work for other complex partnership structures too? Like if I have a mix of individual partners, S-corps and trusts?

I'm a bit skeptical... how accurate is it really? I've been burned by tax software before that gave me completely wrong information about K1 requirements.

It absolutely works for mixed partner structures - that's actually where it shines brightest. The system automatically identifies different partner types and provides customized guidance for each category, showing exactly which sections of the K1 need to be completed for individuals, S-corps, trusts, etc. Regarding accuracy, I completely understand your skepticism. What impressed me was that taxr.ai actually cites the specific IRS regulations and revenue procedures it's using for each recommendation. You can verify everything against the source material, which gave me much more confidence than other tools I've tried.

Wait, how does this actually work? Do they just sit on hold for you? I've spent literal days of my life waiting on IRS hold music.

Sorry but this sounds too good to be true. The IRS wait times are insane right now. I highly doubt anyone can get through faster than just waiting yourself.

They use a system that basically waits on hold for you, and then calls you when an IRS agent actually answers. You don't have to sit there listening to the hold music for hours - you can keep working on other things and then just pick up when they connect you. Yes, the wait times are absolutely insane right now, which is exactly why this service is so helpful. They have technology that keeps your place in line without you having to stay on the phone. I was skeptical too, but when I got a call back in about 2 hours after waiting 4+ hours on my own attempts, I was sold. The best part was getting connected to an agent who actually understood partnership tax issues.

That's a great point about the tax software! Which software are you using that gives you trouble with blank 199A sections? I'm using ProSeries right now.

I've had this issue with both UltraTax and Lacerte in previous years. ProSeries is actually a bit better about this particular situation, but you might still get a "soft" warning that you can override. For ProSeries specifically, you can usually bypass these warnings without entering zeros, but I've found that checking the box that says "QBI Not Applicable" in the 199A section often prevents the warnings altogether. The software is getting better each year at recognizing these situations, but it's still not perfect.

This is correct! I just checked the draft instructions for 2023 and they maintain the same guidance. There's a checkbox specifically for "all partners are C-Corps" that needs to be marked, but then you can skip the rest of the 199A calculations.