NOl and QBI

Forum|Forum|6 years ago
March 2, 2020
2 replies
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A newbie question - is there any relationship at all between the NOL and QBI? I am a landlord with 10 properties, and I meet the requirements for being a real estate professional (work more than 750 hours a year on rentals in one way or another; the income/expenses are all QBI but what about NOL? Really no idea here.

TurboTax Home & Biz Windows

ColeenD3

I'm not sure what you mean. QBI is based on income. NOL means that you have a greater loss than income. These losses are usually business losses and add up to more than all of your income, including any W-2 income.

An NOL is not a loss on your business. When the IRS speaks of "business" when they are describing an NOL, they are not referring to a sole-proprietorship, Loss on your business is taken on the 1040 Line 12. A business loss can contribute to an NOL.

To have an NOL, your loss must generally be caused by deductions from your:

Trade or business,
Work as an employee (although not deductible for most taxpayers for 2018 through 2025),
Casualty and theft losses resulting from a federally declared disaster,
Moving expenses (although not deductible for most taxpayers for 2018 through 2025), or
Rental property.

See PUB 536 for calculating an NOL.

rgoodricAuthor

Thank you, Coleen!

I am still a bit muddled, but gaining clarity. To add some elements to my question:

I do have 10 rentals but also a W-2 from my day job. The past two years, due to substantial rental renovations, the rentals are running at a loss when all is said and done. I see that I have the QBI figure in TurboTax (Home and Business) showing up negative for 2019 as well as from 2018. So, no QBI deduction - makes sense.

When the prompt for "2018 Net Operating Loss" appears, nothing is automatically calculated (I did use TurboTax for 2018 as well).

Is it that my rentals have nothing to do with NOL? (The losses from my rentals in 2018 were already worked into calculating my AGI on 1040 Line 7a - coming from Schedule 1 Line 5 - ie, my Schedule E).

OR, do I now go back to my 2018 taxes to figure this out?

JohnB5677

You will not generate a Net Operating Loss. This could occur if you had a business or if you filed a Schedule C. Because your loss is due to rental activity, you will have a Passive Loss Carryforward.

If you had losses of less than $25,000 on rental activity and your AGI is not greater than $100,000, you will be able to take the full loss this year. Passive loss carryovers only occur in values greater than that. If a carryover loss is warranted, TurboTax will generate all of the documentation.

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ky1124

I have a question about this.

I have a negative QBI from my business, and my non-business income does not offset the loss from my QBI. Am I allowed to include my negative income from QBI into my NOL calculation?

RobertB4444

No. The negative QBI is already included in your business loss.

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ntram2004

I had sch C loss in 2021. It did not give me NOL carryover. Just QBI loss carryover. I have sch C income (insurance brokerage) in 2022. It does not seem I can benefit from QBI loss carryover since it did not offset my 2022 income. Why could I not have a NOL carryover?