QBI Operating Loss

Forum|Forum|5 years ago
February 3, 2021
3 replies
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I bought some Properties towards the end of last year and had to do some repairs to get rent ready; this made for an Income loss in 2019. On doing the 2020 taxes, Turbotax is now requesting me to enter QBI Passive Operating Loss for 2019 while it was doing a check of the tax information I had entered so far.

I thought this Software should be the one automatically handling this kind of things instead of asking me such a technical action. I don't know what it wants me to do. It wasn't even providing me a help option.

Best answer by ColeenD3

In the case of one entity, the carryforward seems simple enough. However, that is not the case for some businesses. See this LINK for an explanation of why it is not always so cut and dried. In your case, just enter your Schedule E loss.

ColeenD3Answer

ToksicaAuthor

Coleen, Thanks for your reply. Since we are talking about losses, I might as well ask a question that is puzzling me. I have W2 income and I also have losses of about -$67K from rental properties (bought properties in 2020 that needed rehab), I had assumed that all of the -$67K in losses will be netted against my W2 income. But I noticed that only -$16K was used this year (I saw that when I looked at the State return for the State where the properties were located). What are the rules about how much losses can be used in a tax year

ToddL99

The amount of rental losses that you can write off is proportionately phased out between $100,000 and $150,000.

For example, if your adjusted gross income is $125,000, you can write off $12,500 in rental losses in the year of the loss. If you are an active participant and your adjusted gross income is $150,000 or more, you can write off no rental losses on your tax return in the year of the loss.

When your adjusted gross income is $150,000 or more, you cannot write off any losses on your rental income. The amount of your loss sits in a separate account, and you can only write it off against your capital gains upon qualified sale of the rental property .(Sec. 469(g).

Under IRC § 469(g), current and carryforward passive activity losses are fully deductible in the year of an entire disposition in a fully taxable transaction to an unrelated party.

What is the limitations on rental house losses based on income, filing jointly.

Dave2360

Did you ever get a reasonable answer to this? I am having the same issue for two different rental properties. It appears TT should just calculate it but doesn't and there is not any help for it.

ToksicaAuthor

Yes I did. You should go back and read the the first 3 replies to my question and I think one of them answered it

Diana46

Problem: Federal Review is asking for Schedule E QBI Passive Operating Loss and Passive Operating Loss but does not indicate which fields are missing.

Solution: Probably zero (0).

I worked with two specialists and an expert this evening to interpret what appears to be a coding bug. In the rental property sales carryover section, Passive loss and QBI deduction ask for a by-year value to be entered. If the total loss spans multiple years, and some of the loss is from prior to 2018, one should be able to enter 0 (zero) in the 2018 & 2019 fields, however, the page will not accept the value zero.

During the Federal Review, I was redirected to check the values for the Schedule E form to fill out the Passive Operating Loss and QBI Operating Loss, yet, there are no fields with these titles and it was unclear what to complete (no fields were being highlighted by the system to indicate what is missing). When I entered a value, the next message indicated that the number could not be greater than zero. I entered a negative value (I suspected this was incorrect) and clicked Continue. I was greeted with a Success message that didn't feel accurate. So I navigated back to the original Carryover section and confirmed my suspicions; the original entry is not allowing zero, yet the form is requiring zero in the 2018 and 2019 fields. I corrected the values I had changed in the Federal Review, left 2018 and 2019 blank, returned to the Federal Review section and added zeros when prompted for the missing values.

I believe this is a bug and will cause folks to enter an incorrect value. Hopefully, mine is correct.