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Screen 4835-2 - Farm Rental, QBID, Passive Information (1040)

Qualified Business Income Deduction

Enter
X
 to indicate that this activity is a trade or business eligible for the qualified business income deduction. This activity is included on the appropriate Form 8995 or Form 8995-A.
To calculate the Qualified Business Income Deduction, the application uses the Form 4835, Line 32 – Net farm rental income or loss amount and then includes various additions and deductions from qualified business income. To view the calculated amount, see the Qualified Business Income Calculation Worksheet for Form 4835. To use an amount other than the default, enter an amount in this field. Enter zero if the activity does not have any qualified income.
The application uses the Form 4835, Line 20 – Labor hired amount for calculating the Qualified Business Income Deduction. Enter an amount in this field to use an amount different than the default. W-2 wages for the trade or business are only used on Form 8995-A, Qualified Business Income Deduction and not Form 8995, Qualified Business Income Deduction Simplified Calculation.
Enter the amount of the unadjusted basis of qualified property used in this trade or business. When you use the asset module, the amount calculates and transfers to this field. This amount is used only on Form 8995-A, Qualified Business Income Deduction and not Form 8995, Qualified Business Income Deduction Simplified Calculation.
To include this trade or business in a grouping for the qualified business deduction under the rules of Regulation Section 1.199A-4, enter a group number. Use the same code for all the trade or businesses in the same group. The application will combine all group members into one Qualified business income group. Form 8995-A, Qualified Business Income Deducton, Schedule B – Aggregation of Business Operations is produced. No grouping statement is required on Form 8995, Qualified Business Income Deduction Simplified Calculation.

Passive Activity, Other Carryover and Other Information

Enter the appropriate activity type code.
When there are passive carryovers from farm rentals
3
 or
4
, the application considers them to be former passive activities. Income and losses from former passive activities are reported as follows.
  • If the current-year net income is less than the prior-year suspended losses, the application reports both prior-year suspended losses and current-year net income on Form 8582.
  • If the current-year net income is equal to or greater than the prior-year suspended losses, neither amount is reported on Form 8582.
  • If there is a current-year net loss, only the prior-year suspended losses are reported on Form 8582.
In addition, please note the following:
  • The passive portion of farm rentals are treated with a passive code of
    3
     as other passives. Those with a code of
    4
     are treated as rental real estate.
  • Passive losses from this entity receive passive tax shelter farm treatment. Any gain or loss recalculates by taking into account all AMT adjustments and preferences and any AMT prior year unallowed losses. As prescribed in the Form 6251 instructions, if the amount is a gain, it is included on the Form 8582 AMT version. If the amount is a loss, it is not included on the Form 8582 AMT version. Calculated AMT losses will be carried forward.
Enter
X
 if the farm rental activity is subject to recharacterization under Temp. Reg. 1.469-2T(f)(1) as property that is a rental of nondepreciable property. Net income from passive activities with this box marked will be treated as nonpassive, and will not appear on Form 8582, Passive Activity Loss Limitations. A loss from a farm rental passive activity will be treated as a passive loss and appear on Form 8582.
To include this activity in a passive grouping, enter the aggregation group number. Units with the same aggregation number are reported as one item on the statement worksheets for Form 8582. All of the entities in an aggregation must have the same passive code.
Enter a unique group number to include this activity in a Regulation 1.469-4(d)(1) grouping of a rental activity within a trade or business activity. When grouping activities under Reg. 1.469-4(d)(1), do not use a number that has been used in the Aggregation group field.
The entire group is nonpassive for reporting purposes. Each member of the activity must use passive activity code 3, that is nonpassive. Since the group is nonpassive, the group income does not report on Form 8582 and is not considered net investment income for Form 8960 purposes. The income or loss reports on the appropriate forms and schedules used regularly.
Enter the appropriate code applicable to this member of a passive activity aggregation group or Reg. 1.469-4(d)(1) group.
The statement required by Rev. Proc. 2010-13 is produced using this code and the Aggregation group. The taxpayer must file written disclosure statements with the tax return for the year in which two or more activities are grouped together for the first time (essentially serving as the election to group those activities), or for a year in which changes are made to existing groupings, including when a new activity is added to an existing group.
Use the statement to record the description, tax year taken, effective period (perpetual or for the applicable tax year only), and additional comments about the Form 4835 elections.
Enter last year's regular and AMT passive loss carryovers for this activity. If applicable, last year's data has proforma'd. If the AMT fields are blank, the application assumes there are no AMT carryovers. To enter state-related carryover amounts, use the St CO screen, or use the State allocation spreadsheet.
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