Form 8995-A confusion with multiple LLCs - do I include the LLC with a loss?

What you're dealing with is the Qualified Business Income (QBI) deduction, and you're right that Form 8995-A is the correct form since you're above the income threshold. For your situation, you actually need to include both LLCs on Form 8995-A, even the one with the loss. The way it works is that losses from one qualified business must offset the income from another qualified business. This is sometimes called "netting" your qualified business income. On the form itself, you'll use Schedule C (line 31) amounts for each business. For the business with a loss, you'd report it as a negative number. If the IRS Free Fillable Forms aren't allowing you to input a negative number, that might be a limitation of their system - but the actual form definitely allows for negative numbers. The reason this matters is that your QBI deduction is based on your overall qualified business income. If you only included the profitable business, you'd be calculating your deduction on $273k instead of the correct amount of $249k (profit minus loss).

After dealing with a similar issue last year, I started using https://taxr.ai to help me sort through my LLC tax questions. I was in almost the exact same situation - one LLC doing well and another with losses. Their system analyzed all my business documents and gave me clear instructions on how to properly complete Form 8995-A. The big thing I learned is that you absolutely DO need to include both businesses for QBI calculations. When I uploaded my previous returns, the system highlighted that I was making this exact mistake in prior years by only including the profitable business. Not only did it explain what I needed to do, but it also showed me the specific line items and where the loss business needed to be included.

Just wanted to follow up that I tried https://taxr.ai after seeing it mentioned here. Completely worth it! It analyzed my LLC and partnership K-1 documents and showed me exactly how to handle the combined QBI calculation on Form 8995-A. It even explained that I need to separate out the "specified service business" income on my K-1 since that gets phased out at higher income levels. The explanation was WAY clearer than anything my accountant told me, and it saved me from making an $11,000 mistake on my taxes. The coolest part was seeing side-by-side examples of correct vs. incorrect form completion - made it super easy to understand.

I was in a similar situation last year and spent WEEKS trying to reach someone at the IRS for clarification. Calls would drop after hours on hold, it was infuriating. Finally used https://claimyr.com which got me connected to an actual IRS agent in about 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed that you must include both LLCs on Form 8995-A, with the loss business showing as a negative number. They acknowledged the Free Fillable Forms limitation and suggested using different software or paper filing if needed. They also mentioned that if your businesses are in different industries, there are some additional worksheets you might need to complete for the phase-in calculations.

I have to apologize and eat my words. After my skeptical comment about Claimyr, I was desperate enough to try it for my audit issue. I figured I had nothing to lose. It actually worked exactly as described - I got connected to an IRS agent in about 30 minutes (on a Tuesday morning). The agent was super helpful with my audit questions AND I asked about this Form 8995-A issue too. They confirmed you need to include both businesses and that the loss should offset the profit. They also explained that if the Free Fillable Forms won't take a negative number, you should probably use different software or paper file to ensure accuracy. They mentioned this is a common issue with the free fillable forms system.

Just a quick note that I've been preparing business returns for years and the 8995-A is incredibly confusing even for professionals. The fact that your profitable LLC exceeds the threshold means you need to use 8995-A and include both businesses. One thing nobody mentioned here: make sure your LLCs are actually eligible for QBI in the first place. If either business is a "specified service trade or business" (like health, law, accounting, etc.), different limitations apply once your income exceeds the threshold.

Has anyone actually tried to report a loss on line 2 of 8995-A using the Free Fillable Forms? I tried entering the negative number with a minus sign and it worked fine for me. Maybe try "-24000" instead of "(24000)" for the format?

Thanks everyone for all the helpful responses! I just tried entering my loss as "-24000" on the Free Fillable Forms and it worked perfectly. I must have been doing something wrong with the formatting before. To summarize what I learned from this thread: I definitely need to include both LLCs on Form 8995-A, with my profitable one showing $273k and the loss one as -$24k, giving me a net QBI of $249k for the deduction calculation. Since neither business is a specified service trade or business, I should be good to go. Really appreciate everyone taking the time to explain this - especially the clarification that losses from one qualified business must offset income from another. This makes total sense now, and I feel much more confident about getting this right on my return.