Triva isn't available right now.
Check out the support page for our phone number and hours
Screen 4835-2 - Farm Rental, QBID, Passive Information (1040)
Show all hidden content
Qualified Business Income Deduction
Rental activity rises to the level of a Section 162 trade or business
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.Qualified business income (Force)
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.
W-2 wages (Force)
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.
Qualified property
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.
Regulation Section 1.199A-4 aggregation grouping number
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
Passive activity code
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 of3as other passives. Those with a code of4are 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.
Passive activity is subject to recharacterization
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.note
Net passive income recharacterized as nonpassive income from nondepreciable property will be treated as investment income for Form 4952.
Passive activity aggregation group
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.
note
Non-passive activities (codes 3 and 4) cannot be part of an aggregate grouping. Use aggregation groups for Form 8582 passive activity purposes only. Each member of an aggregation group must have the same passive activity code. See Form 8582 instructions and IRS regulations for more information about proper groupings.
Reg. 1.469-4(d)(1) group
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.
note
- Use Group disclosure code to make any required disclosures for the Reg. 1.469-4(d)(1) group.
- Use the aggregation grouping when the entire activity is considered rental real estate or other rental. Forms 8582 and 8960 will complete as necessary.
Group disclosure code
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.
note
- Disclosures are not required for pre-existing groupings that remain unchanged. Once you start a grouping, you must disclose any change to the group per Rev Proc 2010-13. Deciding if and when to group activities requires careful tax planning. Consult Form 8582 instructions, Rev Proc 2010-13, IRS Publication 925, and Thomson Reuters Checkpoint for more information on grouping activities.
- The aggregation group and the Reg. 1.496-4(d)(1) group can use the group disclosure code. Do not use the same group number for one type of group that is already entered for another grouping.
Election history
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.
note
- Enter the election number assigned to the election in the year it was taken. Learn how to view and edit tax elections to find a table of election numbers or review a list of all 1040 elections available.
- To print an election report, enterXin thePrint election reportfield inElect, located in theElectionsfolder.
- Election information proformas to theElection Historystatement.
- Non-activity-based elections are in theElection Historystatement in theElectscreen, located in theElectionsfolder. Activity-basedElection Historystatements are in the following locations to trackDescription,Tax Year,Effective Period, andComments.ScreenFolder1099RRetirement4835-2Farm RentalC-3BusinessF-3FarmRent-2Rent & Royalty8697, ACA TaxTaxesK1-7K1 1065, 1120SMortgIntItemized
Passive Activity Carryovers
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.