Question

What is my qbi passive activity loss carryover

Forum|Forum|6 years ago
January 23, 2020
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TurboTax Live Self Employed

Qualified Business Income (QBI) passive activity loss carryover is created when losses from one QBI qualified business are netted against the gains from another.

If the net overall QBI is less than zero, it is carried forward as a loss from a separate qualified business and will reduce any potential QBI deduction in the following year (IRC Sec. 199A (c)(2)).

Section 199A (c)(2) states that:

If the net amount of qualified income, gain, deduction, and loss with respect to qualified trades or businesses of the taxpayer for any taxable year is less than zero, such amount shall be treated as a loss from a qualified trade or business in the succeeding taxable year.

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ckn13

RobertG,

Can you help me understand this? I have a loss from 2018 of (71,103). For 2019, on the QBI Deduction Summery Schedule, Line 2 there is a positive 96,827. Line 6 is checked [Simplified Computation (Form 8995) and the following line 7 contains 5,145.

Schedule C, line 31 shows a Net Profit of 120,799 -> 80% of which is 96,639 - suspiciously close to the above 96,827, but maybe pure coincidence. That 120,799 made it all the way into my 1040 and later on line 10 here comes my QBI deduction of 5,145.

I’m really lost.

Chuck N+13

DavidS127

The $96,827 on line 2 of your QBI Ded Summary should show the total from the business(es) listed on line 1.

Note that your Schedule C income amount is reduced by any self-employed health insurance deduction and half of your self-employment tax to arrive at your QBI for that business. That calculation for your return is $96,827, and you will see that on the Qualified Business Income Deduction Smart Worksheet after line 48 on your Schedule C form in TurboTax.

The $71,103 loss carried over from the prior year (should show on line 3 of the QBI Ded Summary) is subtracted from the $96,827. The net is $25,724 and 20% of that is $5,145.

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