General question, I've done a few tax returns for sole props were I can see the QBI deduction. All thus far have had a net gain. However, if I come across a client, which I know I will, that has a loss, logic would tell me that I can't use the QBI on a loss? I know the loss can be carried forward, but if that client has a net gain the following year, they can use the loss against the gain and then take QBI, or QBI gets applied first? There was some example I saw online were they took a QBI on the business income, then QBI on the loss? I'm sure the software does everything for me (proseries) but I want to understand the logic behind it. Thank you very much.
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QBI info: Referenced in TTB 1-5; 6-5; 7-3; 8-15; 8-16 in addition to IRS web-site
Always cite your source for support to defend your opinion -
I think this example explains the basic concept:
2018 business has $10,000 loss. There is no QBI for 2018.
2019 business has $50,000 profit. QBI is based on $40,000 (current year gain minus carryover loss).Comment
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