Can I Delete QBI 8895 Carryforward Loss?

[Anonymous]

In 2018, I chose Yes that my rental properties were QBI. It was a loss and therefore didn't affect my refund, but there's a QBI carryforward loss on Form 8895. In 2019, I decided it was not QBI (not 250 hours) and chose No on the QBI question. I'm working on 2020 now (still not QBI), and saw the 8895 that I apparently overlooked last year. I am wondering the best way to fix this. It won't be QBI in future. Can I just delete form 8895 and pretend I never did that? What are the repercussions if audited? 
I know how to delete it, but am wondering about the legality / consequences if I just delete without filing amended returns. Thanks!

[Cynthiad66]

Yes. you can delete it because you choose to have that deduction.  It is beneficial to you if you qualify for the QBI deduction.  So no loss to the government.  I suggest going back through the interview section of rental property to answer no that your property does not qualify for the QBI deduction so that it will not generate again.

Qualified business income, or QBI, is the net income generated by any qualified trade or business under Internal Revenue Code (IRC) § 162.

Rental properties are usually treated as passive activities, and passive activities are excluded from the definition of a qualified trade or business. However, rentals that qualify as trades or businesses under IRC § 162 are not considered passive, which means they could potentially qualify for the QBI deduction.

To provide preliminary guidance to this popular question, the IRS released Notice 2019-07, the key points of which we've summarized below.

Use this link for additional information:  QBI Deduction on Rental Property

[bidwell2002]

Same problem here.   I had a $22 QBI deduction in 2019.   I do not have 250 hours of rental management activity, so I would like to remove this in 2020.   It said I have a $33 deduction in 2020.   I went to FORMS, go down to 8995-A, deleted it and confirmed.  It's still there, no change.  Try it several times.  Then go back to STEP BY STEP.  Got to the page where it said Is this a QBI?  I clicked "NO".   The deduction is still there.  No change.  The most important question is how to get rid of this form now and next year.  Thanks!

[AkinaLO]

@bidwell2002 What version of TurboTax are you using, CD/Download or TurboTax Online? 

[bidwell2002]

I'm using TurboTax Premier Windows download  version.

[Anonymous]

I'm the OP and did mine on the form called 'QBI Ded Summary' - I zero'd out line 3. It did indeed remove the carryforward loss from other areas of my return, though I remain a tad uncomfortable indicating that I had zero loss in a previous year when I previously reported that I did. I think this is the correct place to do it in TurtboTax though. Also, TT throws off an error when you do the 'review for errors' but I'm just ignoring that.

I assume it won't matter to the IRS that I'm lying on this form since it doesn't impact my return amount, but if anyone wants to comment on whether there's any concern about lying, then I'd love input there.

[Cathy S]

I have the same situation and I've come to the same conclusion about wanting the delete the QBI carryforward, but I am finding it impossible to delete the carryforward.  When I click on the support statement icon, it takes me to another form, but it's all circular:  QBI Ded Summary -> Carryover Wksheet -> QBI Ded Summary  etc.  I can't zero it out on 8995 either.  

So, how were you able to zero out line 3 on the QBI Ded Summary?  I'm using TurboTax Premier Windows download  version like another member above.  Is this a version issue?  

[Anonymous]

I right-clicked it and chose Override. However, this actually does not work, at least not if you want to eFile. I got to the very end and it wouldn't let me eFile with this error. I called TurboTax support.  After a bit of researching, they found that you have to clear it out in a worksheet in order to avoid the error. One of the very last forms in my Federal return is called Smart Worksheets. I think this is where we found and deleted the carryforward QBI. It didn't even require clicking override. If that isn't it, look at other forms that are Worksheets. IT's possible it is the 'Carryover Worksheet' but I'd start in the 'Smart Worksheet' and go from there.

[bidwell2002]

I cleared the QBI summary, that gave my deduction in 1040 for QBI to be zero, which is correct.  But like what you said, I cannot efile.   Thanks to your suggestion, I found in the Sch E  Asset Worksheet, the QBI attribute and cleared it.   I even restarted my TurboTax section, unfortunately it didn't get rid of QBI form.  The only way to clear the QBI deduction for me is to set the value to 0 in QBI summary.     Question is what did you do after fixing the worksheet to refresh the computation?  Thanks!

[Anonymous]

It will refresh automatically. If it isn't, then the data still exists in a different worksheet. Try the two that I suggested.

[Cathy S]

Were you able to file electronically?  Overriding the QBI cfd seems to be preventing me from filing electronically.  If there's a way around that, I'd love to hear it.  

[bidwell2002]

Yes.  We cannot e-file if just overwrite.  I have to file all 54 pages to federal by mail.  What's worse is I do not know if this issue will carry forward to next year filing.  It's better to be able to get rid of it  with the suggestion last posted, but I'm still not successful with that.

[Anonymous]

Yes, I was able to efile. You shouldn't use the "override" function on a field. Change the number on the worksheet and it does not produce an error any more, and you can efile.