There are two separate issues here:
- The QBI calculation
- The passive activity calculation; and corresponding Section 179 deduction
- Your facts are limited, but you indicate a large passive activity carryover. The facts don't reflect the tax year(s) that generated the large passive activity carryover.
- For QBI purposes, suspended passive activity losses incurred before January 1, 2018 are not taken into account for QBI purposes. This essentially requires tracking suspended passive activity losses separately for QBI and then the normal passive activity rules for purposes of Schedule E.
- Section 179 requires income in order to take the deduction, or the Section 179 deduction is carried over.
- So based on the limited facts, it appears TT may be computing both of these correctly. Can't verify it, but could make sense. Depending on when the passive activity losses were incurred, you could have income when computing QBI, but still be using passive activity losses incurred before 1/1/2018 for Sch E purposes; generating no income. Hence no Section 179 deduction allowed in the current year.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
