Business & farm
TurboTax is populating Form 8995 correctly. The instructions for the form don't distinguish between capital gain from a business activity and that reported in other places in the return. The IRS Instructions for Form 8995 state the following:
Line 11
Enter your taxable income figured before any QBI deduction, computed as follows. • Form 1040, 1040-SR, or 1040-NR filers: Form 1040, 1040-SR, or 1040-NR, line 11, minus Form 1040, 1040-SR, or 1040-NR, line 12.
Line 12
Enter the amount from your tax return as follows. • Form 1040, 1040-SR, or 1040-NR, line 3a, plus your net capital gain. If you’re not required to file Schedule D (Form 1040), your net capital gain is the amount reported on Form 1040, 1040-SR, or 1040-NR, line 7. If you file Schedule D (Form 1040), your net capital gain is the smaller of Schedule D (Form 1040), line 15 or 16, unless line 15 or 16 is zero or less, in which case nothing is added to the qualified dividends.
Dividends from a Real Estate Investment Trust (REIT), qualify for a Section 199A deduction. They are not considered to be QBI itself, but are included with QBI for the Section 199A deduction (even if you have no separate business).
If you wish to remove the REIT dividends from the QBI calculation on Form 8995, you can do so in Forms Mode (if you are using TurboTax CD/Download version). Please follow these steps:
- Go into Forms Mode by clicking on the Forms icon in the top right of the blue bar.
- In the Forms in My Return list on the left, click Form 8995. The form will appear on the right side of the screen.
- Below line 5, you will see the Qualified REIT dividend and PTP income Smart Worksheet. [See screenshot, below.]
- Right-click on the figure entered for Qualified REIT dividends and select Override from the menu.
- You can now delete the number that appears. [DON'T enter a zero.]
- To return to the interview, click on the Step-By-Step icon in the top right of the blue bar.
If you wish to delete the entire form, just click the Delete box at the bottom of the form.
