Just to be clear, we are dealing with form 8995 (Qualified Business Income Deduction), Not 8895 (one-time dividends received deduction for certain cash dividends from controlled foreign corporations).
I'm going to start with your original question.
Form 8995 line 3 shows a LOSS carryforward from prior years resulting from Schedule C losses.
- This represents a carryover loss from 2021 for the Qualified Business Income Deduction. Not a NOL.
- What is Form 8995?
The same form show a LOSS carryover to next year on line 16 (line 3 + this year's Schedule C loss).
- You are correct. Line 16 will now carry over to 2023's tax return.
- If your net qualified business income is negative, then you have a qualified business loss. You can't claim a deduction on your current year's return, but you will carry the loss forward to the following year.
Shouldn't the amount on Line 3 (or a portion of it) be carried to form 1040 via Schedule 1 line 8?
- No, this is not a NOL. Its an adjustment to the Qualified Business Income Deduction.
Your final questions were: Do you see my confusion? Those TT did use those losses this year. Why not? Should it? Will TT use them next year?
- I did understand your confusion,
- You did use the losses from 2021 Line 3 on your 2022 tax return, but
- They may not have been usable because you may not have made a large enough profit.
- As line 16 indicates, you will have the loss carryforward available in 2023.
If this does not completely answer your question, please contact us again and provide some additional details.
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