Hi,

I have a client who had suspended passive losses as well as QBI suspended losses (passive) being carried forward to his 2021 return on several K-1s from partnerships. In 2021, one of the partnerships sold a property which created a large enough 1231 gain to allow him to use up all of his suspended passive losses. The QBI suspended loss for some partnerships, however, were left to be carried forward to 2022.

Now on the 2022 return, the QBI suspended loss gives the error: "QBI PY Susp Loss should not have a value when no previously disallowed losses are present for regular tax purposes." From what I can tell, the only ways I can get rid of this error is to 1) zero out the QBI suspended loss that is being carried over or 2) add an amount to the passive activity suspended loss carryover from prior year for regular tax purposes. It is my understanding that unused negative QBI should continue to be carried forward until it is ultimately offset by positive QBI. Additionally, the client does not have any suspended loss carryovers for regular tax purposes. Therefore, both of those options seem incorrect to me.

Any advice on how I should go about addressing this error? Thank you in advance.