What this line means
If lines 6 and 7 together result in a negative REIT/PTP amount, the negative number goes here. This is the REIT/PTP loss you carry forward to next year’s Form 8995 line 6. It reduces your future REIT dividends and PTP income for QBI purposes. If line 7 is zero or positive, this line is zero. 1
Does this apply to you?
- Your PTP losses exceeded your REIT dividends and PTP income this year
- Your prior-year REIT/PTP carryforward on line 6 plus current-year income on line 5 is still negative
- You entered zero on line 7 because the combined amount was negative — the negative portion is captured here
- Your combined REIT/PTP income is positive (this line is zero)
Easy to overlook
PTP losses are the primary driver of this carryforward REIT dividends are almost always positive, but publicly traded partnerships can generate losses. If your PTP reported a $30,000 loss and your REIT dividends were $10,000, the net is negative $20,000. That $20,000 goes here and reduces future REIT/PTP income. 2 IRS Publication 535 — Qualified Business Income Deduction
This carryforward is separate from QBI and separate from passive loss rules The REIT/PTP loss carryforward tracked here is purely for Section 199A purposes. It does not affect your passive loss limitations on Form 8582 or your QBI loss carryforward on line 17. Each system has its own rules. A loss can exist for QBI purposes even when passive loss rules allow the loss currently. 3 IRS Form 8995 Instructions — Line 18
Watch out for this
Forgetting to carry this amount to next year’s return. Like the QBI carryforward on line 17, the IRS does not automatically track this for you. If you do not enter it on next year’s line 6, you lose the benefit of the carryforward. Keep a copy of this year’s Form 8995 with your tax records so you have the number when you file next year.
Footnotes
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IRS Form 8995 Instructions, Line 18. https://www.irs.gov/instructions/i8995 ↩
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IRS Publication 535, Business Expenses, Chapter 12 — REIT/PTP Loss Carryforward. https://www.irs.gov/pub/irs-pdf/p535.pdf ↩
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IRS Form 8995 Instructions, Lines 6 and 18 — Separate Tracking. https://www.irs.gov/instructions/i8995 ↩