(1) A trust or estate must calculate its QBI, W-2 wages, UBIA of qualified property, qualified REIT dividends, and qualified PTP income. (2) The QBI of a trust or estate must be computed by allocating qualified items of deduction described in § 199A(c)(3) in accordance with the classification of those deductions which are directly attributable to one class of income under §1.652(b)-3(a), and deductions not directly attributable within the meaning of §1.652(b)-3(b) (other deductions) are allocated in a manner consistent with the rules in §1.652(b)-3(b).8 (3) Any depletion and depreciation deductions and any amortization deductions that otherwise are properly included in the computation of QBI are included in the computation of QBI of the trust or estate, regardless of how those deductions may otherwise be allocated between the trust or estate and its beneficiaries for other purposes of the Code.9 b.
Allocation Among Trust or Estate and Beneficiaries. —
(1) The QBI (including any amounts that may be less than zero as calculated at the trust or estate level), W2 wages, UBIA of qualified property, qualified REIT dividends, and qualified PTP income of a trust or estate are allocated to each beneficiary and to the trust or estate based on the relative proportion of the trust's or estate's distributable net income (DNI), as defined by section 643(a), for the taxable year that is distributed or required
8 Items of deduction of a trust that enter into the computation of distributable net income are allocated among the items of income according to the following principles. All deductible items directly attributable to one class of income are allocated to that class of income. To the extent that any items of deduction which are directly attributable to a class of income exceed that class of income, they may be allocated to any other class of income, (including capital gains), included in distributable net income in the same manner provided for deductions which are not directly attributable to specific class of income. The deductions which are not directly attributable to a specific class of income may be allocated to any item of income, including capital gains, included in computing distributable net income, but a portion must be allocated to tax-exempt income. See Treas. Reg. § 1.652(b)-3(d). Treas. Reg. § 1.652(b)-3(b). 9 For property held in a trust, the allowable depletion and depreciation deductions are apportioned between the income beneficiaries and the trustee on the basis of the trust income allocable to each, unless the governing instrument (or local law) requires or permits the trustee to maintain a reserve for depletion depreciation in any amount. See Treas. Reg. § 1.167(a) -1(a); Treas. Reg. § 1.611-1(c)(4).
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