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Returning Member

QBI Deduction

I had a loss on our LLC S-corp for 2018 that I applied against our earned income for that year.  Turbo Tax for 2019 used that loss as a carry-forward and would not allow the QBI deduction on business income for 2019.  Is that an error?

2 Replies
Not applicable

QBI Deduction

the s-corp loss is deductible assuming you had basis and it was passive so as to be treated as a passive loss carryover.  the QBI for any year can not be negative. negative QBI from an entity is carried forward to offset QBI income in future years.  the QBI income in future years does not need to be from the source. TT handled it correctly.  QBI is not taxable income. the net QBI is figured and then 20% at most becomes a deduction. 

so if the 2018 QBI loss carryforward exceeded the current year QBI income there would be no QBI deduction

also there would be no QBI deduction if your taxable income reduced by qualified dividends and long-term gains exceeded the threshold.  look at form 8995or 8995a for the computation. 

Level 15

QBI Deduction

If you had a loss in 2018 then there would be a negative QBI deduction that carries to 2019 and gets netted against any positive QBI deduction you get this year ... that  is correct.  


Here is the reasoning ... you got the income deduction last year against other income instead of the QBI  so you must carryforward the unused QBI to the following year.   If you also had a loss this year then the negative QBI carryforward would be increased.   This is the flip side of the coin ... you don't get to have your cake and eat it too ... there is always red tape. 

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