QBI Passive loss c/f should not have a value when no previously disallowed losses are present for regular tax purposes

[Pittfan]

I am receiving this error in the Schedule E worksheet for 2024:

The software wants me to remove the $5,004 entry, however this entry is accurate if you look at the 2023 Schedule E Worksheet and Form 8582 Part VII (a).  There is no regular tax or AMT suspended loss to input.  I am at a loss as to why this error is occurring, thanks in advance for any assistance.

[PatriciaV]

It would be helpful to have a TurboTax ".tax2024" file to test this issue further.

If you would be willing to send us a “diagnostic” file that has your “numbers” but not your personal information, please follow these instructions: 

In TurboTax Desktop, open your return and go to Online in the TurboTax header. (On a Mac computer, choose File >> Share.)

1. Choose Send Tax File to Agent.
2. You will see a message explaining what the diagnostic copy is.  Click Send on this screen and wait for the Token number to appear. 
3. Reply to this thread with your Token number (including the dash) and tag (@) the Expert requesting the token from you. 
4. Please include any States that are part of your return - the is VERY important. 

We will then be able to see the same experience you are having. If we are able to determine the cause, we'll reply here and provide you with a resolution. 

[Pittfan]

@PatriciaV I am using the online version of Turbo tax and can only download my .tax files for 2023 and earlier.  Are there different steps to download the diagnostic file you can use on Turbo Tax online?

[Pittfan]

@PatriciaV I actually figured it out.  The token number is 1264049

[PatriciaV]

Please provide the complete token number, which has a long number, a dash, then a shorter number. The instructions for TurboTax Online are below. Please include the name of your State(s) as well.

In TurboTax Online, open your return, go to the black panel on the left side of your program and select Tax Tools. 

1. Then select Tools below Tax Tools.
2. A window will pop up which says Tools Center.
3. On this screen, select Share my file with Agent.
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.
5. Reply to this thread with your Token number (including the dash) and tag (@) the Expert requesting the token from you.
6. Please include any States that are part of your return - this is VERY important.

@Pittfan 

[Pittfan]

@PatriciaV Thanks, I followed the instructions, and this is what it gave me, the token number is not formatted as you mentioned: 1264325.  I have PA and WV as my states as well.

[Mike9241]

for your information, it is possible to have a QBI passive loss carryover but not a passive loss carryover, they are two separate things

example passive loss from rental real estate $10K, QBI passive loss also $10K

adjusted gross income $140K

the passive loss for regular tax purposes is allowed but since the QBI is a loss, it doesn't just disappear but becomes a carryforward to offset QBI income in future years.. 

[Pittfan]

Thanks, I feel like that is the situation I am in, but the software is not allowing me to carryforward the QBI one.  Very frustrating.

[Pittfan]

@PatriciaV Good morning, have you had a chance to review the test file?

[PatriciaV]

The resolution is to enter 1 or -1 for the regular carryforward. This will allow the QBI to be carried forward to next year's return.

The experience has been reported to our development team for investigation. It's unlikely this will be addressed before the filing deadline.

[rubesMN]

Entering 1 or -1 in the field identified in the original post does not work.  Can you please explicitly clarify where we are  to 'enter 1 or -1' so we don't lose the carryforward. 

[PatriciaV]

The negative 1 should be entered in the Carryovers to 2024 Smart Worksheet found at the bottom of the Schedule E worksheet on Line G in the Regular Tax column. This is the form that appears in the Smart Check popup window. See screenshot below.

You can also open this form in TurboTax for Desktop using Forms Mode.

@rubesMN 

[rubesMN]

After putting -1 in the Regular Tax column and re-running my Smart Check, results in a new entry being identified as missing:

[rubesMN]

Following up.  I did check and 2023 had no operating losses.  I zero'ed those 3 entries and things seem to be ok.  However, in 2022 had a QBI passive activity operating loss and it was applied to income in 2023 taxes.  So it seems there should not be a QBI carryover for my passive operating loss.   Perhaps a bug in the code that carries it forward not seeing it was applied in 2023.  Or, maybe I'm missing something.

Hence: blank out QBI suspended loss as Turbotax suggested?

[DaveF1006]

Yes, remove the QBI suspended loss since it was used up in 2023.