Must Section 199A QBI Be Aggregated for Three related Entities?

[fred7777]

A client has three different eligible Section 199A entities. All three are family owned and satisfy all the aggregation rules and taxable income QBI limitations.  All three are real estate rental businesses. Two of the Sub S Corps have "Net Rental Real Estate Losses" (combined Losses are $8,000) reported on Line 2 of their Schedule K-1 ... the third company reports a K-1 Line 2 profit  of $2,000. Thus, the net total of all three entities is a $6,000 loss. I entered the appropriate Code "V" in Schedule K -Box 17 - "Section 199A Income", but the "Qualified Business Income Deduction Simplified Worksheet"  aggregates the three income or (loss) amounts on the worksheet's Line 2. 

1. 1. Is this the correct reporting?
2. If no, should I remove the Code V from the two entities reporting losses so that just the profit reporting entity is reported? 
3. Can I override the Section 199A designation checkboxes for the two profitable entities?

[TaxMonkey · Accepted solution]

This is not "aggregation" which has a specific meaning under 199A.  But when you have multiple businesses the QBI is determined for each business and then added together to determine the total QBI.

In other words, no you cannot leave out the losses to maximize your tax deduction.  Not only are they included this year, but the loss itself is carried forwards and will reduce QBI in future years.

[fred7777]

Thank you, makes sense. But can't get my ProSeries to show the net loss as a carry forward to 2019.  Don't like to do "overrides" and can't get my QBI Deduction Worksheet to show a carry forward on Lines 16 and 17