When calculating the unadjusted basis immediately after acquisition (UBIA) in regards to the QBI deduction, what assets are included?
Publication 535, page 51 explains what assets are to be included in the calculation:
"For purposes of determining your UBIA for all qualified property, the unadjusted basis immediately after acquisition means the basis on the placed-in-service date. Qualified property includes all tangible property subject to depreciation under section 167 that is held and used by the trade or business (or aggregated trade or business) during and at the close of the tax year, for which the depreciable period hasn’t ended. The depreciable period ends on the later of 10 years after the property is placed-in-service or the last day of the full year for the applicable recovery period under section 168. Additional first-year depreciation, such as bonus depreciation, doesn’t affect the applicable recovery period. Improvements to property are treated as a separate qualified property."
If assets are entered on the 4562 detail screens, the program will automatically calculate UBIA (see below if screens 6-9 are used instead*). Starting in Drake18, the depreciation detail listing, FED DEPR Schedule, denotes the included assets with an asterisk to the right of the cost.
Then, the UBIA total for all assets is shown at the bottom right of the FED DEPR Schedule:
In a 1065 or 1120S, this amount is carried to Wks QBI and then to the K-1 Wks QBI, based on ownership/shareholder percentage.
*If depreciation is being calculated outside the software and screens 6-9 are used to report depreciation, the software does not have enough information about the basis of each asset or the detail on the date acquired, life, etc. needed to automatically calculate what amount is UBIA. Therefore, when assets are not entered on the 4562 detail screens, you must use the adjustment field located on the Schedule K screen > Other Information tab > line X to indicate the UBIA amount. Review the field help (F1) for additional details about this adjustment. The amount entered on the K screen, line X does not increase the amount that is shown on the FED DEPR Schedule (if any), but it does adjust the amount allocated to each shareholder/partner on their K-1 Wks QBI.
See the IRS Section 199A FAQs and Publication 535 for more information.