QBI Deduction from a PTP

Forum|Forum|3 years ago
March 3, 2023
2 replies
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I have a PTP with the K-1 reporting $8,000 of income on line 1 and $8,000 QBI on line 20Z in 2022. However, I have passive losses that offset the income so that I have no taxable income from this partnership being reflected on the schedule E. Notwithstanding the lack of taxable income TurboTax is reflecting this $8,000 of QBI as part of on lines 6 and 8 on form 8995 and computes the 20% deduction. How can I get a deduction without reporting the related taxable income?

AliciaP1

You are reporting the related taxable income that qualifies you for the QBI deduction. You have entered your Schedule K-1 to report $8,000 of QBI (. After that is reported, your carryover losses are being deducted from the eligible income. If you had related QBI losses, they would be applied to the reported QBI income and then the deduction (if any) would be calculated.

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SMSingerAuthor

The issue is that I do have passive losses to offset the income this year but TT does not reduce the QBI based upon such losses. It is allowing a deduction where there is no taxable income. Based upon my review of various IRS and other publications it seems obvious that if there is no reported taxable QBI income there cannot be a deduction for QBI.

AliciaP1

If the passive losses applied did not originate from the QBI income, your taxable income will be reduced and the QBI income will not.

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Mike9241

if this PTP had suspended prior passive losses from years after 2018, these should also be reflected in the QBI loss carryover and offset the current year QBI income