I have an S Corporation with section 179 loss carryforward from 2017. Why isn't Lacerte using this loss to calculate the 2018 Qualified Business Income Deduction?

[rbynaker · Accepted solution]

Yes, that seems to be broken at the moment, but from a tax law standpoint I'm not convinced that a 179 c/o from prior to 2018 would be considered an item of QBI.  Check the regs, I know they're pretty clear when it comes to PAL carryovers and the need to track pre-TCJA and post-TCJA amounts when determining QBI.  I'm assuming the same concepts apply to S179 pre- and post- amounts.

I'm not saying I know the answer, just that you might want to research it more before reaching your conclusion.

Rick

[matt2]

According to the Journal of Accountancy article dated January 22, 2019, The IRS released proposed regulations to amend Prop. Regs. Sec. 1.199A-3(b)(1)(iv) to provide that previously disallowed, suspended, limited, or carried over losses are taken into account for QBI purposes on a first-in, first-out basis and are treated as from a separate trade or or business.

Is there away to override the QBI calculation in Lacerte to include the S Corp loss carryforward from 2017 into the 2018 QBI calculation?

[rbynaker]

Great cite matt, thanks for the research.  Unless I'm pulling the wrong version of the regs, what I'm seeing from 1.199A-3(b)(1)(iv) says this:

"However, losses or deductions that were disallowed, suspended, limited, or carried over from taxable years ending before January 1, 2018 (including under sections 465, 469, 704(d), and 1366(d)), are not taken into account in a later taxable year for purposes of computing QBI."

https://www.irs.gov/pub/irs-drop/td-reg-107892-18.pdf

Rick

[matt2]

Thanks for the missing piece. It appears we ignore carry forward losses from 2017 for purposes of computing QBI in 2018.

Matt

[George4Tacks]

Like this issue? https://accountants-community.intuit.com/articles/1796713-inv-25078-partnership-and-s-corporate-calc...