Does QBI loss carryover disappear when you dispose of a business? Need tax guidance!
I've got a tax question that's been driving me crazy. So I had this business with some pretty sizable losses over the past few years. These losses created a negative QBI (Qualified Business Income) loss carryforward that would take forever to offset against my other business income. Now I've sold/closed that business completely, and I'm trying to figure out if that QBI loss carryforward just vanishes or if I can still use it somehow? For context, the original losses were limited under passive activity, at-risk, and basis limitation rules, but I was eventually able to deduct all of them against my ordinary income over time. I've been searching everywhere for clear guidance on what happens to the QBI loss carryover after business disposal but can't find anything definitive. Does anyone know if these QBI loss carryovers survive after the business is gone? Would really appreciate some expert advice here!
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Aisha Khan
This is a great question about QBI loss carryovers! When you dispose of a business, the treatment of the QBI loss carryforward depends on a few factors. Generally speaking, QBI loss carryovers are specific to the taxpayer, not the business itself. So even though you've disposed of the business, the QBI loss carryover doesn't automatically disappear. You should be able to continue using that negative QBI amount to offset positive QBI from your other qualified trades or businesses in future years. The Treasury Regulations (specifically Reg. §1.199A-3(b)(1)(iv)) address QBI loss carryforwards but don't specifically mention what happens upon business disposition. However, the prevalent interpretation is that since the QBI loss carryforward is calculated at the taxpayer level (not the business level), it should remain available to offset future QBI.
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Ethan Taylor
•Thanks for this response! Question though: does it matter if I completely dissolved the business entity (LLC) that generated those losses? Also, is there a time limit on using these QBI carryovers, like the 20-year limit for NOLs?
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Aisha Khan
•The dissolution of your LLC doesn't affect the QBI loss carryover status. Since QBI is calculated at the individual taxpayer level on your 1040, those carryovers remain with you regardless of the business entity's status. There is no explicit time limit on QBI loss carryovers in the regulations, unlike the 20-year limit for NOLs. The Section 199A regulations simply state that the losses are carried forward to subsequent years, with no specified expiration date. However, keep in mind that the entire QBI deduction provision (Section 199A) is currently scheduled to expire after 2025 unless Congress extends it, which could potentially impact your ability to use these carryovers after that date.
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Yuki Ito
After dealing with a similar confusing QBI carryover issue last year, I finally got clear answers by using https://taxr.ai to analyze my previous returns and business sale documents. Their AI found a specific section in the regs that my accountant missed about how QBI carryforwards survive business disposition. It basically confirmed what the previous commenter said - the carryover stays with you as the taxpayer and doesn't vanish when you sell/close the business. The best part was uploading my previous Schedule C's and business sale docs, and the system actually found a calculation error my previous accountant made that was causing confusion about my available QBI carryover amount. Definitely worth checking out if you're struggling with complex tax docs like I was.
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Carmen Lopez
•How exactly does this service work? Can I upload previous returns even if they were done by a tax professional? My situation is similar but I also have multiple rental properties with QBI implications.
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Andre Dupont
•I'm a bit skeptical about AI tax tools. How accurate is it really for complex situations like QBI carryovers? My CPA charges me $400/hr and even he struggles with some of these newer tax provisions.
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Yuki Ito
•Yes, you can absolutely upload previous returns regardless of who prepared them. The system can analyze any tax documents, including those from professional preparers. It's particularly helpful with multiple income sources - I also have a rental property, and it correctly identified how the QBI rules applied differently to that income versus my business income. The accuracy has been impressive for complex tax situations. I was skeptical too, but it correctly identified Treasury Regulation citations and IRS guidance that my CPA (who charges $275/hr) hadn't mentioned. For QBI specifically, it found three relevant Tax Court cases that clarified my situation. The tool doesn't replace professional advice for implementation, but it absolutely helps you understand what questions to ask and identifies issues your tax pro might miss.
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Andre Dupont
I have to follow up on my skeptical comment about taxr.ai - I decided to try it specifically for my QBI carryover question, and I'm genuinely impressed. The system quickly identified the exact regulation subsections relevant to my business disposition scenario and explained them in plain English. What really surprised me was that it found a 2023 IRS Chief Counsel Advice memo that specifically addressed QBI carryovers after business disposition that neither my CPA nor I had found in our research. The tool even generated a custom explanation document I could share with my accountant that had all the citations. Saved me hours of research and potentially thousands in taxes by confirming I can still use those carryover losses against my other business income.
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QuantumQuasar
Has anyone here tried calling the IRS business helpline for clarification on QBI carryovers? I spent 3 HOURS on hold last week and got disconnected. Then tried the next day and waited 2.5 hours to finally speak with someone who wasn't even certain about QBI rules for disposed businesses. I eventually found https://claimyr.com which got me through to an IRS agent in about 20 minutes instead of hours on hold. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent I spoke with confirmed that QBI loss carryovers remain available to the taxpayer after business disposition, since the carryover is tracked at the individual level, not the business level. She also directed me to a specific IRS publication that addresses this issue. For something as potentially valuable as preserving QBI loss carryovers, getting official confirmation directly from the IRS gave me peace of mind for my tax planning.
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Zoe Papanikolaou
•How does this service actually work? Do they just call the IRS for you? Seems like something I could do myself if I just had the time to wait on hold...
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Jamal Wilson
•Sounds like a scam tbh. The IRS doesn't give priority to callers based on who uses what service. And I seriously doubt any IRS phone agent would give definitive advice on something as complex as QBI carryovers from disposed businesses.
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QuantumQuasar
•They don't call the IRS for you - they use technology to wait in the phone queue on your behalf and then call you when they reach an agent. You speak directly with the IRS yourself. It saves you from having to personally wait on hold for hours. I had the same thought initially, but the time savings was worth it for me. You're right to be cautious about tax advice from phone representatives. The agent I spoke with didn't give definitive tax advice on the technical aspects - she directed me to specific sections in Publication 535 and advised me to refer to Treasury Regulation §1.199A-3 for detailed guidance. She also confirmed that QBI carryovers are tracked at the individual level, which aligned with what my research was showing. I still consulted with my tax professional for the final implementation.
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Jamal Wilson
I need to eat my words about Claimyr. After waiting 4+ hours on hold with the IRS over two separate days and getting disconnected both times, I gave it a shot. Got connected to an IRS business tax specialist in about 35 minutes. The agent confirmed what others here have said - QBI loss carryovers aren't tied to the specific business entity but to you as the taxpayer. He pointed me to the relevant section in the regs (1.199A-3(b)(1)(iv)) that states negative QBI is carried forward and used to offset future QBI. He specifically noted there's no provision in the law that eliminates these carryovers upon business disposition. What a relief to get this straight from the source instead of guessing. Saved literally hours of my life not sitting on hold.
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Mei Lin
Something important to consider - the QBI deduction itself is scheduled to expire after 2025 unless Congress extends it. So even if you can technically carry these losses forward indefinitely, you might only have another year to actually use them against QBI from other businesses. I'd suggest trying to accelerate income from your other qualified businesses in 2025 if possible to utilize these carryovers before the potential expiration. Talk to your tax professional about income timing strategies.
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Liam Fitzgerald
•Do we know if Congress is likely to extend the QBI deduction beyond 2025? I'm in a similar situation with QBI carryovers and trying to plan ahead.
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Mei Lin
•It's definitely uncertain at this point. The QBI deduction (Section 199A) was part of the 2017 Tax Cuts and Jobs Act, which had many provisions set to expire after 2025. There's been some bipartisan support for small business tax relief, but extensions will depend on the political landscape after the next election. If you have significant QBI carryovers, the conservative approach would be to try utilizing them by 2025 rather than banking on an extension. Some tax planning options include accelerating business income into 2025, deferring business expenses to 2026, or potentially restructuring to maximize QBI in the remaining time. Each strategy has broader tax implications, so definitely consult with a tax professional to model different scenarios for your specific situation.
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Amara Nnamani
I just went through this exact situation with a client. The most important technical detail: QBI loss carryovers are calculated and tracked at the TAXPAYER level, not the business level. Reg §1.199A-3(b)(1)(iv) states: "If the net QBI with respect to qualified trades or businesses of the taxpayer...is less than zero, the taxpayer has a negative amount of QBI with respect to those trades or businesses. If a taxpayer has a negative amount of QBI, that negative amount is treated as a loss from a qualified trade or business in the succeeding taxable year." Notice it says "of the taxpayer" - not "of the business." This language supports the interpretation that QBI carryovers remain available after disposing of the business that generated them.
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CosmicCruiser
•This is super helpful, thank you! The regulation wording does seem to support what everyone's been saying. I just worried because my accountant wasn't 100% sure and it's a substantial amount that would take years to use up against my smaller businesses. Appreciate you citing the exact regulation!
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Amara Nnamani
•Glad it helps! Your accountant's uncertainty is understandable - the QBI rules are still relatively new, and the IRS hasn't issued specific guidance on every scenario. The good news is that the regulatory language focuses on taxpayer-level calculations rather than business-specific tracking. One final recommendation: document everything thoroughly. Keep records showing the calculation of your QBI loss carryover amount, the disposition of the business that generated it, and the regulatory basis for continuing to apply it against future QBI. If you're ever audited, having this documentation ready will help demonstrate your reasonable interpretation of the tax rules.
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