PDF document

- 1 -

Userid: CPM Schema: instrx Leadpct: 100% Pt. size: 9 Draft Ok to Print
AH XSL/XML Fileid: … ions/i8995/2023/a/xml/cycle07/source (Init. & Date) _______

Page 1 of 11 11:01 - 16-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Department of the Treasury
Internal Revenue Service
2023

Instructions for Form 8995

Qualified Business Income Deduction Simplified Computation

Section references are to the Internal Revenue Code unless trust's distributable net income (DNI) for the tax year distributed
otherwise noted. (or required to be distributed) to the beneficiary or retained by
the estate or trust. If the estate or trust has no DNI for the tax
Future Developments year, section 199A items are allocated entirely to the estate or
For the latest information about developments related to Form trust.
8995 and its instructions, such as legislation enacted after they Although estates and trusts may compute their own QBI
were published, go to IRS.gov/Form8995. deduction, to the extent section 199A items are allocable to the
estate or trust, section 199A items allocated to beneficiaries
aren’t includible in the estate’s or trust’s QBI deduction
General Instructions computation. See the Instructions for Form 1041, U.S. Income
Tax Return for Estates and Trusts.
Purpose of Form
Use Form 8995 to figure your qualified business income (QBI) Electing Small Business Trusts (ESBT). An ESBT must
deduction. Individual taxpayers and some trusts and estates compute the QBI deduction separately for the S and non-S
may be entitled to a deduction of up to 20% of their net QBI from portions of the trust. The Form 8995 used to compute the S
a trade or business, including income from a pass-through entity, portion’s QBI deduction must be attached as a PDF to the ESBT
but not from a C corporation, plus 20% of qualified real estate tax worksheet filed with Form 1041. When attached to the ESBT
investment trust (REIT) dividends and qualified publicly traded tax worksheet, the trust must show that the information is
partnership (PTP) income. However, your total QBI deduction is applicable to the S portion only, by writing “ESBT” in the top
limited to 20% of your taxable income, calculated before the QBI margin of the Form 8995. See the Instructions for Form 1041.
deduction, minus net capital gain (increased by any qualified
dividends). Determining Your Qualified Trades or
Businesses
Who Can Take the Deduction Your qualified trades and businesses include your domestic
Individuals and eligible estates and trusts that have QBI use trades or businesses for which you’re allowed a deduction for
Form 8995 to figure the QBI deduction if: ordinary and necessary business expenses under section 162.
• You have QBI, qualified REIT dividends, or qualified PTP However, trades or businesses conducted by corporations and
income or loss (all defined later); and the performance of services as an employee aren’t qualified
• Your 2023 taxable income before your QBI deduction is less trades or businesses. Generally, specified service trades or
than or equal to $182,100 if single, married filing separately, businesses (SSTBs) aren’t qualified trades or businesses.
head of household, qualifying surviving spouse, or are a trust or However, all or a part of the SSTB may be a qualified trade or
estate, or $364,200 if married filing jointly; and business if your taxable income is at or below the threshold or
• You aren’t a patron in a specified agricultural or horticultural within the phase-in range.
cooperative.
As provided in section 162, an activity qualifies as a trade or
Otherwise, use Form 8995-A, Qualified Business Income business if your primary purpose for engaging in the activity is for
Deduction, to figure your QBI deduction. income or profit and you’re involved in the activity with continuity
S corporations and partnerships. S corporations and and regularity.
partnerships aren’t eligible for the deduction, but must pass For purposes of section 199A, if you own an interest in a
through to their shareholders or partners the necessary pass-through entity, the trade or business determination is made
information on an attachment to Schedule K-1. See the at the entity level. Material participation under section 469 isn’t
Instructions for Form 1120-S, U.S. Income Tax Return for an S required to qualify for the QBI deduction. Eligible taxpayers with
Corporation, and Form 1065, U.S. Return of Partnership Income. income from a trade or business may be entitled to the QBI
Cooperatives. Cooperatives aren’t eligible for the deduction. deduction if they otherwise satisfy the requirements of section
Instead, cooperatives must provide the necessary information to 199A.
their patrons on Form 1099-PATR or an attachment to help The ownership and rental of real property may constitute a
eligible patrons figure their deduction. Certain agricultural or trade or business if it meets the standard described above. Also,
horticultural cooperatives may qualify for a deduction under Rev. Proc. 2019-38 provides a safe harbor under which a rental
section 199A(g). See the Instructions for Form 1120-C, U.S. real estate enterprise will be treated as a trade or business for
Income Tax Return for Cooperative Associations, for rules purposes of the QBI deduction. Rental real estate that doesn’t
applicable to agricultural and horticultural cooperatives. meet the requirements of the safe harbor may still be treated as
Estates and trusts. To the extent that a grantor or another a trade or business for purposes of the QBI deduction if it’s a
person is treated as owning all or part of a trust or estate, the section 162 trade or business.
owner will compute its QBI deduction for the portion owned as if
The rental or licensing of property to a commonly controlled
section 199A items had been received directly by the owner.
trade or business operated by an individual or a pass-through
Generally, a non-grantor trust or estate may either claim the QBI
entity is considered a trade or business under section 199A.
deduction or provide information to their beneficiaries. In
determining the QBI deduction or the information that must be Services performed as an employee excluded from quali-
provided to beneficiaries, the estate or trust allocates section fied trades or businesses. The trade or business of
199A items based on the relative proportion of the estate's or performing services as an employee isn’t a trade or business for

Jan 9, 2024 Cat. No. 69662S

- 2 -

Page 2 of 11 Fileid: … ions/i8995/2023/a/xml/cycle07/source 11:01 - 16-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

purposes of section 199A. Therefore, any amounts reported on 3. The trades or businesses meet at least two of the
Form W-2, box 1, other than amounts reported in box 1 if following factors:
“Statutory Employee” on Form W-2, box 13, is checked, aren’t a. They provide products, property, or services that are the
QBI. If you were previously an employee of a business and same or that are customarily offered together.
continue to provide substantially the same services to that
business after you’re no longer treated as an employee, there is b. They share facilities or share significant centralized
a presumption that you’re providing services as an employee for business elements such as personnel, accounting, legal,
purposes of section 199A for the 3-year period after ceasing to manufacturing, purchasing, human resources, or information
be an employee. You can rebut this presumption on notice from technology resources.
the IRS by providing records such as contracts or partnership c. They are operated in coordination with, or reliance on,
agreements that corroborate your status as a nonemployee. one or more of the businesses in the aggregated group.
For more information on if you’re an employee or an If a relevant pass-through entity (RPE) aggregates multiple
independent contractor, see Pub. 15-A, Employer’s trades or businesses, you may not separate the trades or
Supplemental Tax Guide, and Pub. 1779, Independent businesses aggregated by the RPE, but you may add additional
Contractor or Employee. trades or businesses to the aggregation, if the rules above are
SSTBs excluded from your qualified trades or businesses. met.
An SSTB is generally excluded from the definition of qualified If you choose to aggregate multiple trades or businesses,
trade or business. including or apart from any aggregations made by an RPE,
An SSTB is any trade or business providing services in the complete Schedule B (Form 8995-A) before starting Part I of
fields of: Form 8995-A. You must attach any RPE aggregation
• Health; statement(s) to your Schedule B (Form 8995-A).
• Law; If you’re not making an aggregation election and are therefore
• Accounting; not required to file a Schedule B (Form 8995-A), attach your
• Actuarial science; RPE’s aggregation statement(s) to your Form 8995-A.
• Performing arts; Your aggregations must be reported consistently for all
• Consulting; subsequent years, unless there is a significant change in facts
• Athletics; and circumstances that disqualify the aggregation.
• Financial services;
• Brokerage services; Note. You must combine the QBI, W-2 wages, and Unadjusted
• Investing and investment management; Basis Immediately after Acquisition (UBIA) of qualified property
• Trading or dealing in securities, partnership interests, for all aggregated trades or businesses, for purposes of applying
commodities; or the W-2 wages and UBIA of qualified property limits. However,
• Any trade or business where the principal asset is the these limits won’t apply until your income, before the QBI
reputation or skill of one or more of its employees or owners, as deduction, is more than the threshold. If your income is more
demonstrated by: than the threshold, you must use Form 8995-A.
–Receiving fees, compensation, or other income for
endorsing products or services; Determining Your Qualified Business
–Licensing or receiving fees, compensation or other income
Income
for the use of taxpayer’s image, likeness, name, signature,
voice, trademark, or any other symbols associated with the Your QBI includes qualified items of income, gain, deduction,
individual’s identity; or and loss from your trades or businesses that are effectively
–Receiving fees, compensation, or other income for connected with the conduct of a trade or business in the United
appearing at an event or on radio, television, or another States. This includes qualified items from partnerships (other
media format. than PTPs), S corporations, sole proprietorships, and certain
Exception 1: If your 2023 taxable income before the QBI estates and trusts that are allowed in calculating your taxable
deduction is less than or equal to $182,100 if single, head of income for the year.
household, qualifying surviving spouse, or are a trust or estate, To figure the total amount of QBI, you must consider all items
or $364,200 if married filing jointly, your SSTB is treated as a that are attributable to the trade or business. This includes, but
qualified trade or business. isn’t limited to, unreimbursed partnership expenses, business
Exception 2: If your taxable income before the QBI deduction interest expense, deductible part of self-employment tax,
is more than $182,100 but not more than $232,100 if single, self-employment health insurance deduction, and contributions
head of household, qualifying surviving spouse, or are a trust or to qualified retirement plans. QBI doesn’t include any of the
estate, and is more than $364,200 but not more than $464,200 if following:
married filing jointly, an applicable percentage of your SSTB is • Items that aren’t properly included in income.
treated as a qualified trade or business, you must complete • Income that isn’t effectively connected with the conduct of a
Schedule A (Form 8995-A). trade or business within the United States (go to IRS.gov/ECI).
Aggregation. If you’re engaged in more than one trade or • Wage income (except “Statutory Employees” where Form
business, each trade or business is a separate trade or business W-2, box 13, is checked).
for purposes of section 199A. However, you may choose to • Amounts received as reasonable compensation from an S
aggregate multiple trades or businesses into a single trade or corporation.
business for purposes of figuring your deduction, if you meet the • Amounts received as guaranteed payments.
following requirements. • Amounts received as payments by a partner for services other
1. You or a group of persons directly or indirectly own 50% than in a capacity as a partner.
or more of each trade or business for the majority of the tax year, • Items treated as capital gains or losses under any provision of
including the last day of the tax year, and all trades or the Internal Revenue Code (Code).
businesses use the same tax year end; • Dividends and dividend equivalents.
• Interest income not properly allocable to a trade or business.
2. None of the trades or businesses are an SSTB; and • Commodities transactions or foreign currency gains or losses.

2 Instructions for Form 8995 (2023)

- 3 -

Page 3 of 11 Fileid: … ions/i8995/2023/a/xml/cycle07/source 11:01 - 16-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• Income, loss, or deductions from notional principal contracts. must look to how it’s reported on your federal income tax return.
• Annuities (unless received in connection with the trade or For example, ordinary business income or loss is generally
business). included in QBI if it was used in computing your taxable income,
• Qualified REIT dividends. not excluded, suspended, or disallowed under any other section
• Qualified PTP income. of the Code. Also, a section 1231 gain or loss is only includible in
QBI if it isn’t capital gain or loss. See the QBI Flow Chart, later, to
See the QBI Flow Chart, later, to figure if an item of income, figure if an item of income, gain, deduction, or loss is included in
gain, deduction, or loss is included in QBI. QBI.
Losses or deductions from a qualified trade or business that Determining if information reported on your Form
are suspended by other provisions of the Internal Revenue Code 1099-PATR is included in QBI. The amounts reported to you
are not qualified losses or deductions and, therefore, are not as your share of patronage dividends and similar payments on
included in your QBI for the year. Such Code provisions include, Form 1099-PATR aren’t automatically included in your QBI.
but aren’t limited to, sections 163(j), 179, 461(l), 465, 469, Payments may be included in QBI to the extent they are (1)
704(d), and 1366(d). Instead, qualified losses and deductions related to your trade or business, (2) reported to you by the
are taken into account in the tax year they’re included in cooperative as qualified income items on an attachment to Form
calculating your taxable income. 1099-PATR, and (3) not payments reported as from an SSTB,
When losses or deductions are suspended, you must unless your taxable income is at or below the threshold, in which
determine the qualified portion of the losses or deductions that case payments from SSTBs are included in your QBI.
must be included in QBI in subsequent years when allowed in If you received qualified payments reported to you on Form
calculating your taxable income. In general, losses and 1099-PATR from a specified agricultural or horticultural
deductions incurred prior to 2018 are not qualified losses or cooperative, you must reduce your QBI by the patron reduction
deductions and are not included in QBI in the year they are and use Form 8995-A to compute your QBI deduction.
included in calculating taxable income.
Determining if items on Schedule C (Form 1040) are inclu-
If a loss or deduction is partially suspended, only the portion ded in QBI. The net gain or loss reported on your Schedule C
of the allowed loss or deduction attributable to QBI must be (Form 1040) isn’t automatically included in your QBI. See the
considered when determining QBI from the trade or business in QBI Flow Chart, later, to figure if an item of income, gain,
the year the loss or deduction is incurred. The portion of the deduction, or loss is included in QBI.
allowed loss or deduction attributable to QBI is determined by
first calculating the percentage of the total loss attributable to Determining Your Qualified REIT
QBI by dividing the portion of the total loss attributable to QBI by
the overall total loss. The allowed loss or deduction is then Dividends and Qualified PTP Income/
multiplied by this percentage to determine the portion of the Loss
allowed loss or deduction attributable to QBI. Qualified REIT dividends include any dividends you received
If your trade or business is an SSTB, whether the trade or from a REIT held for more than 45 days and for which the
business is a qualified trade or business is determined based on payment isn’t obligated to someone else and that isn’t a capital
your taxable income in the year the loss or deduction is incurred. gain dividend or qualified dividend, plus your qualified REIT
If your taxable income is within the phase-in range in that year, dividends received from a regulated investment company (RIC).
you must determine and apply the applicable percentage in the This amount is reported to you on Form 1099-DIV, line 5.
year the loss or deduction was incurred to determine the Qualified PTP income or loss includes your share of qualified
qualified portion of the suspended loss or deduction. items of income, gain, deduction, and loss from a PTP that is not
Losses and deductions retain their status as either qualified treated as a corporation for federal income tax purposes. It may
or non-qualified from year to year while suspended. Therefore, also include gain or loss recognized on the disposition of your
you must track each category of loss or deduction until the loss partnership interest that isn’t treated as a capital gain or loss.
or deduction is no longer suspended. For an example of a
reasonable method to track and compute the amount of Note. PTP income generated by an SSTB may be limited to the
previously disallowed losses or deductions to be included in your applicable percentage or excluded if your taxable income
QBI deduction calculation in the year allowed, see Tracking exceeds the threshold, in which case you may need to complete
Losses or Deductions Suspended by Other Provisions, later. Part II of Schedule A (Form 8995-A). See the Instructions for
Form 8995-A for more information.
When losses or deductions previously suspended by other
When losses or deductions from a PTP are suspended in the
Code provisions are allowed in calculating taxable income, the
year incurred, you must determine the qualified portion of the
qualified portion of the loss or deduction allowed under each
losses or deductions that must be included as qualified PTP
provision is treated as a qualified net loss carryforward from a
losses or deductions in subsequent years when allowed in
separate trade or business when calculating the current year’s
calculating your taxable income. In general, losses and
QBI deduction. See Line 3.
deductions that were incurred prior to 2018 are not qualified PTP
Any qualified loss or deduction from an SSTB allowed in losses or deductions and are not included in calculating taxable
calculating taxable income isn’t included on the Schedule A income.
(Form 8995-A) as the applicable percentage was previously If your PTP is an SSTB, whether the PTP loss is a qualified
determined and applied in the year the loss or deduction was loss is determined based on your taxable income in the year the
incurred and should not be redetermined in the year the loss or loss or deduction is incurred. If your taxable income is within the
deduction is allowed. phase-in range in that year, you must determine and apply the
Determining if items included on Schedule K-1 are inclu- applicable percentage in the year the loss or deduction was
ded in QBI. The amounts reported on your Schedule K-1 as incurred to determine the qualified portion of the suspended loss
“QBI/Qualified PTP Items Subject to Taxpayer-Specific or deduction.
Determinations” from a partnership, S corporation, estate, or Losses and deductions retain their status as either qualified
trust aren’t automatically included in your QBI. To figure if the or non-qualified from year to year while suspended. Therefore,
item of income, gain, deduction, or loss is included in QBI, you
Instructions for Form 8995 (2023) 3

- 4 -

Page 4 of 11 Fileid: … ions/i8995/2023/a/xml/cycle07/source 11:01 - 16-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

you must track each loss or deduction from a PTP until the loss deductibility of the loss for purposes of any other provisions of
or deduction is no longer suspended. the Code.
When losses or deductions previously suspended by other
Code provisions are allowed in calculating taxable income, the Line 6
qualified portion of the loss or deduction allowed for each PTP is Enter income as a positive number and losses as a negative
treated as a qualified net loss carryforward from a separate PTP number.
when calculating the current year’s QBI deduction. See Line 7.
Any qualified PTP loss or deduction from an SSTB allowed in Line 7
calculating taxable income isn’t included on the Schedule A Include here the qualified portion of PTP (loss) carryforward
(Form 8995-A) as the applicable percentage was previously allowed in calculating taxable income in the current year, even if
calculated and applied in the year the loss or deduction was the loss was from a PTP that you no longer hold an interest in or
incurred and should not be redetermined in the year the loss or is no longer in existence. Losses and deductions that remain
deduction is allowed. suspended by other Code provisions are not qualified losses and
deductions and must be tracked separately from any qualified
Specific Instructions trade or business losses for use when subsequently allowed in
calculating taxable income.
Line 1
If you aggregated multiple trades or businesses into a single Line 8
business, enter the aggregation group name. For example, Any negative amount will be carried forward to the next year.
Aggregation 1, 2, 3, etc., instead of entering the business name, This carryforward doesn’t affect the deductibility of the loss for
and leave line 1(b) blank. purposes of any other provisions of the Code.

Note. If you aggregated trades or businesses, you must attach Line 11
Schedule B (Form 8995-A) or similar schedule. Enter your taxable income figured before any QBI deduction,
If you’re relying on the safe harbor contained in Rev. Proc. computed as follows.
2019-38, enter each enterprise as identified on the statement • Form 1040, 1040-SR, or 1040-NR filers: Form 1040,
required for use on the safe harbor. For example, Enterprise 1, 2, 1040-SR, or 1040-NR, line 11, minus Form 1040, 1040-SR, or
3, etc. 1040-NR, line 12.
• Form 1041 filers: Form 1041, line 23, plus Form 1041, line 20.
Enter on line 1(b) the employer identification number (EIN). If • Form 1041-N filers: Form 1041-N, line 13, plus qualified
you don’t have an EIN, enter your social security number (SSN) income deduction reported on Form 1041-N, line 9.
or individual taxpayer identification number (ITIN). If you’re the • Form 990-T filers: Form 990-T, Part I, line 11, plus Form 990-T,
sole owner of an LLC that isn’t treated as a separate entity for Part I, line 9.
federal income tax purposes, enter the EIN given to the LLC. If • S-corporation portion of ESBT filers: ESBT Tax Worksheet,
you don’t have an EIN, enter the owner's name and tax line 13, plus ESBT Tax Worksheet, line 11.
identification number.
Enter on line 1(c) the net qualified business income or (loss) Line 12
for the trade, business, or aggregation reported in the Enter the amount from your tax return as follows.
corresponding row. Do not include here any losses or deductions • Form 1040, 1040-SR, or 1040-NR, line 3a, plus your net
suspended from use in calculating taxable income in the current capital gain. If you’re not required to file Schedule D (Form
year or any portion of qualified losses or deductions previously 1040), your net capital gain is the amount reported on Form
suspended by other Code provisions that are allowed in 1040, 1040-SR, or 1040-NR, line 7. If you file Schedule D (Form
calculating taxable income in the current year. For qualified 1040), your net capital gain is the smaller of Schedule D (Form
business net (loss) carryforward from the prior year, see 1040), line 15 or 16, unless line 15 or 16 is zero or less, in which
instructions for line 3. case nothing is added to the qualified dividends.
• Form 1041, line 2b(2), plus your net capital gain. For estates
Line 2 or trusts required to file Schedule D (Form 1041), add the
If you have more than five trades or businesses, attach a qualified dividends to the smaller of Schedule D (Form 1041),
statement with the name and taxpayer identification number of line 18a(2), or line 19(2), unless either line 18a(2) or 19(2) is zero
the trade(s) or business(es) and include the income and loss or less, in which case nothing is added to the qualified dividends.
from those trade(s) or business(es) in the total for line 2. • Form 1041-N, line 2b, plus the smaller of Form 1041-N,
Schedule D, line 10 or 11, unless line 10 or 11 is zero or less, in
Line 3 which case nothing is added to the qualified dividends.
Include here the qualified portion of trade or business (loss) • Form 990-T filers who are trusts, Schedule D (Form 1041), the
smaller of line 18a(2) or 19(2), unless either line 18a(2) or 19(2)
carryforward allowed in calculating taxable income in the current is zero or less, in which case the net capital gain for purposes of
year, even if the loss was from a trade or business that is no section 199A is zero.
longer in existence. See Determining Your Qualified Business S-corporation portion of an ESBT, your ESBT Tax Worksheet,
Income, earlier, and Tracking Losses or Deductions Suspended •
line 2b, plus the smaller of your ESBT’s Schedule D (Form
by Other Provisions, later. Losses and deductions that remain 1041), line 18a(2) or 19(2) is zero or less, in which case nothing
suspended by other Code provisions are not qualified losses and is added to your qualified dividends.
deductions and must be tracked separately for use when
subsequently allowed in calculating taxable income. Line 15
Line 4 Enter this amount on your Form 1040 or 1040-SR, line 13; Form
1040-NR, line 13a; Form 1041, line 20; Form 1041-N, line 9;
If you have a qualified business net loss for the year, you don’t Form 990-T, line 9; and S-corporation portion of an ESBT,
qualify for the QBI deduction unless you have qualified REIT line 11.
dividends or qualified PTP income. The loss will be carried
forward to next year. This carryforward doesn’t affect the

4 Instructions for Form 8995 (2023)

- 5 -

Page 5 of 11  Fileid: … ions/i8995/2023/a/xml/cycle07/source                            11:01 - 16-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Line 16                                                          later tax years regardless of whether the qualified PTP(s) that 
This is the amount to be carried forward to the next year. This  generated the loss is still in existence. This carryforward doesn’t 
amount will offset QBI in later tax years regardless of whether  affect the deductibility of any loss for purposes of any other 
the trade(s) or business(es) that generated the loss is still in provisions of the Code.
existence. This carryforward doesn’t affect the deductibility of 
any loss for purposes of any other provisions of the Code.

Line 17
This amount must be carried forward to next year. This amount 
will offset qualified REIT dividends and qualified PTP income in 

Instructions for Form 8995 (2023)                                                                                                5

- 6 -

Page 6 of 11 Fileid: … ions/i8995/2023/a/xml/cycle07/source 11:01 - 16-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

QBI Flow Chart
Figure 1. Use this chart to determine if an item of income, gain, deduction, or loss is included in QBI.

1. Is the item effectively connected with the conduct of a trade No
or business within the U.S.?
Yes
2. Is the item from a trade or business (this includes general
business income and deduction items as well as deductible tax on
self-employment income, self-employed health insurance, No
contributions to qualied retirement plans, unreimbursed
partnership expenses, interest expenses for the purchase of the
partnership/S corporation interest/stock)?
Yes
3. If the item is from a pass-through entity (partnership, S
corporation, or trust) and the character of the item can’t be
determined at the entity level (section 1231 gains/losses, involuntary No
conversions, interest from debt nanced distributions, etc.), did you
determine the item to be ordinary (not capital or personal)? Note: If
the item isn’t from a pass-through entity and it doesn’t require a
determination at the investor level, skip this test.
Yes

4. Is the item included in guring your taxable income? Items
disallowed or limited, including the basis, at-risk, passive loss, or No
excess business loss rules, aren’t included in QBI until the year
included in taxable income.

Yes
5. Is the item treated as a capital gain (loss) or dividend/dividend Yes
equivalent?
No
6. Is the item interest income other than interest income allocable to
a trade or business? Note: Interest income from an investment of Yes
working capital, reserves, or similar accounts isn’t allocable to a
trade or business.
No
7. Is the item an annuity, other than an annuity received in Yes
connection with the trade or business?
No

8. Is the item a commodities transaction, foreign currency gain (loss) Yes
described in section 954(c)(1)(C) or (D), or from a notional principal
contract under section 954(c)(1)(F)?
No
9. Is the item qualied PTP income (loss)? If “Yes,” it’s not QBI, but
it’s included in the REIT/PTP component of the QBI computation. Yes
Include this item as a qualied item of income, gain, deduction, or
loss from a PTP.
No
10. Is the item W-2 wage income (except “Statutory Employees” Yes This item isn’t QBI.
where Form W-2, box 13, is checked)?
No See Figure 2, QBI Flow
Chart (continued).

6 Instructions for Form 8995 (2023)

- 7 -

Page 7 of 11  Fileid: … ions/i8995/2023/a/xml/cycle07/source                                     11:01 - 16-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

QBI Flow Chart (continued)
Figure 2. Use this chart to determine if an item of income, gain, deduction, or loss is included in QBI.

11. Is the item an amount received for reasonable compensation 
from an S corporation, an amount received as a guaranteed                      Yes
payment, or a payment received for services other than in a capacity 
as a partner under section 707(a)?
          No
                                                                            No
12. Is the item related to an SSTB?
          Yes
                                                                            Yes
13. Is your taxable income at or below the threshold?
          No

14. Is your taxable income above the threshold and within the           Yes    This item is QBI. This item isn’t QBI.
phase-in range? If “Yes,” this item is partially includible in QBI. Use 
Form 8995-A, instead, and complete Schedule A (Form 8995-A). 
          No

Instructions for Form 8995 (2023)                                                                                        7

- 8 -

Page 8 of 11 Fileid: … ions/i8995/2023/a/xml/cycle07/source 11:01 - 16-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

1. For the allocation to QBI, multiply the remaining losses
Tracking Losses or Deductions (after Step 1), up to the total suspended losses reported in
Suspended by Other Provisions column A, row 2, by column B, row 2, and enter this amount in
column J, row 2.
A worksheet, QBI Loss Tracking Worksheet, is provided 2. For the allocation to Non-QBI, multiply the remaining
! below that can help you track your suspended losses. losses (after Step 1), up to the total suspended losses reported
CAUTION Losses and deductions that would be properly includible
in column A, row 2, by 100% less the amount in column B, row 2,
in QBI, if such loss or deduction wasn't suspended (excluded and add it to any amount already included in column F, row 2.
from taxable income) by other provisions, must be tracked
separately for purposes of determining the future amount Step 3. See the instructions for columns G, K, H, and L for rows
includible as negative QBI. Use as many copies of the worksheet 1 and 2.
as necessary to separately track your suspended loss(es) under
each suspending provision.
Prior Year Suspended Losses Allowed in 2019
Specific Instructions Note. If column C, row 3, is zero, skip Step 4 through Step 6.
Step 4. Allocate prior year suspended losses allowed from
Note. All losses should be entered as a negative number on the column C, row 3, up to the remaining suspended losses reported
worksheet. in column H, row 1, to column F, row 3.
Column A. Total suspended losses in year of disallowance. Step 5. If there are any prior year suspended losses allowed
For rows 1 through 7, enter your suspended losses by year remaining from column C, row 3, after Step 4, allocate the
starting with any pre-2018 losses. Additional rows can be added remaining prior year suspended losses allowed between QBI
as needed in future years. Allocate these losses between and Non-QBI using the FIFO method until each year's loss has
Non-QBI and QBI in columns E and I. See below. been reduced to zero.
Note. All pre-2018 losses are allocable to Non-QBI. 1. For the allocation to QBI, multiply the remaining losses
(after Step 4), up to the sum of the remaining suspended losses
Column E. Non-QBI suspended losses. For rows 1 through 7, reported in column H, row 2, and column L, row 2, by column B,
enter suspended losses allocable to Non-QBI into the row 2, and enter this amount in column J, row 3.
appropriate year row (for example, row 1, pre-2018; row 2, 2018; 2. For the allocation to Non-QBI, multiply the remaining
row 3, 2019, etc.). losses (after Step 4), up to the sum of the remaining suspended
Column I. QBI suspended losses. For rows 2 through 7, enter losses reported in column H, row 2, and column L, row 2, by
suspended losses allocable to QBI into the appropriate year row 100% less the amount in column B, row 2, and add it to any
(for example, row 2, 2018; row 3, 2019, etc.). amount already included in column F, row 3.
Column B. QBI fixed percentage. Divide column I by column 3. If any prior year suspended losses allowed remain from
A for each year and enter the percentage in the corresponding column C, row 3, after Steps 5(a) and (b), multiply the remaining
year row. losses (after Steps 5(a) and (b)), up to the sum of the remaining
suspended losses reported in column H, row 3, and column L,
Column C. Prior year suspended losses allowed. For rows 2 row 3, by column B, row 3, and add it to any amount already
through 7, enter any prior year suspended losses allowed in the included in column J, row 3.
corresponding row for the year allowed.
4. Then, multiply the remaining losses (after Steps 5(a) and
Note. The total prior year suspended losses allowed entered in (b)), up to the sum of the remaining suspended losses reported
column C, row 8, can't exceed the total amount entered in in column H, row 3, and column L, row 3, by 100% less the
column A, row 8. amount in column B, row 3, and add it to any amount already
included in column F, row 3.
Column F. Non-QBI allocated prior year suspended losses
allowed and column J, QBI allocated prior year suspended Step 6. See the instructions for columns G, K, H, and L for rows
loses allowed. When allocating prior year suspended losses 1 through 3.
allowed (column C) between Non-QBI (column F) and QBI
(column J), the First-In-First-Out (FIFO) method must be used. Prior Year Suspended Losses Allowed in 2020 and
To apply this rule, prior year suspended losses allowed must first
be allocated to any losses suspended from 2017 and earlier, Beyond
until the pre-2018 loss (row 1) are exhausted. All prior year
suspended losses allowed allocated to pre-2018 years are Repeat Step 4 through Step 6 and adjust as necessary for any
Non-QBI. Once all pre-2018 losses have been used, losses will prior year suspended losses allowed in column C, row 4, and
be allocated based on the QBI Fixed Percentage in column B for each row thereafter, as applicable.
each subsequent year in which losses were suspended.
Additional year rows and columns may be added as needed
in future years.
Prior Year Suspended Losses Allowed in 2018
Columns G and K. Utilized “20XX.” Use these columns to
Note. If column C, row 2, is zero, skip Step 1 through Step 3. show how the allocated prior year suspended losses allowed in
Step 1. Allocate prior year suspended losses allowed from columns F and J are utilized each year. For example, the loss
column C, row 2, up to the total suspended losses reported in reported in column F for row 2 must tie to the amount reported in
column A, row 1, to column F, row 2. column G(i), row 8; and the loss reported in column F for row 3
must tie to the amount reported in column G(ii), row 8, etc.
Step 2. If there are any prior year suspended losses allowed
remaining from column C, row 2, after Step 1, allocate the Column H. Remaining suspended losses. For each row, take
remaining prior year suspended losses allowed between QBI the amount in column E less the amounts utilized in all columns
and Non-QBI. G(i) through G(vi). This amount can't be more than zero.

8 Instructions for Form 8995 (2023)

- 9 -

Page 9 of 11  Fileid: … ions/i8995/2023/a/xml/cycle07/source                                     11:01 - 16-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Column L. Remaining suspended losses.        For each row, take     row. Take column K(i), row 8, divided by the sum of column K(i), 
the amount in column I less the amounts utilized in all columns     row 8, plus column G(i), row 8, multiplied by column D, row 2, 
K(i) through K(vi). This amount can't be more than zero.            and enter this amount in column K(i), row 9. Written as a formula: 
                                                                    column K(i), row 9 = column D, row 2 x (column K(i), row 8 ÷ 
Column D. Allowed losses limited by other Code sections.            (column K(i), row 8 + column G(i), row 8)).
When a prior year suspended loss allowed under one Code 
                                                                    Next, compute the amount for Non-QBI for the 2018 row. Take 
section is subsequently limited by another Code section, this 
                                                                    column G(i), row 8, divided by the sum of column G(i), row 8 + 
loss shouldn't be included in the QBI calculation until the loss is 
                                                                    column K(i), row 8, multiplied by column D, row 2, and enter this 
allowed in the computation of taxable income. Instead, that loss 
                                                                    amount in column G(i), row 9. Written as a formula: column K(i), 
is added to the total suspended losses in the year of 
                                                                    row 9 = column D, row 2 x (column G(i), row 8 ÷ (column G(i), 
disallowance under the new limiting Code section for 
                                                                    row 8 + column K(i), row 8)).
continuation of its suspension. This column along with row 9 
addresses how to account for such losses.                           Continue the computation for columns K(ii) and G(ii) through 
                                                                    K(vi) and G(vi), multiply the percentage times the amount in 
In column D, enter the amount of any prior year suspended 
                                                                    column D, row 3, for 2019; column D, row 4, for 2020; column D, 
losses allowed under this Code section, but subsequently 
                                                                    row 5, for 2021, column D, row 6, for 2022; and column D, row 7, 
disallowed under another Code section on the row for the year 
                                                                    for 2023, respectively.
the loss was allowed under this Code section. These amounts 
will be allocated between Non-QBI and QBI in columns G and K        Row 10. Total prior year suspended losses allowed that 
for the corresponding year. See row 9 below.                        must be included in QBI. The amounts reported in columns 
                                                                    K(i) through K(vi) for row 10 equals the loss amount that must be 
Row 9. Allocation of allowed losses limited by other Code 
                                                                    included in your current year QBI, respectively for each year, as 
sections. To allocate the allowed losses limited by other Code 
                                                                    a loss from a separate trade or business.
sections between QBI and Non-QBI, start with QBI for the 2018 

Instructions for Form 8995 (2023)                                                                                                  9

- 10 -

Page 10 of 11 Fileid: … ions/i8995/2023/a/xml/cycle07/source 11:01 - 16-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Keep for Your Records

QBI Loss Tracking Worksheet
Use this worksheet to track losses or deductions suspended by other provisions and attributable to QBI using the FIFO method.
Code [Enter the Code section limiting your loss]

Part I Suspended & Allowed Losses
A. Total suspended B. QBI ﬁxed percentage C. Prior year D. Allowed losses
losses in year suspended limited by other
of disallowance losses allowed Code sections
1. Pre-2018 0.00 %
2. 2018 %
3. 2019 %
4. 2020 %
5. 2021 %
6. 2022 %
7. 2023 %
8. Total
Part II Non-QBI Suspended and Allowed Losses
Allocable to Non-QBI
E. F. Allocated G(i). G(ii). G(iii). G(iv). G(v). G(vi). H. Remaining
Suspended prior year Utilized Utilized Utilized Utilized Utilized Utilized suspended
suspended
losses losses allowed 2018 2019 2020 2021 2022 2023 losses
1. Pre-2018
2. 2018
3. 2019
4. 2020
5. 2021
6. 2022
7. 2023
8. Total
9. Allocation of allowed losses limited by
other Code sections . . . . . .
Part III QBI Suspended and Allowed Losses
Allocable to QBI
I. J. Allocated K(i). K(ii). K(iii). K(iv). K(v). K(vi). L. Remaining
Suspended prior year Utilized Utilized Utilized Utilized Utilized Utilized suspended
suspended
losses losses allowed 2018 2019 2020 2021 2022 2023 losses
1. Pre-2018
2. 2018
3. 2019
4. 2020
5. 2021
6. 2022
7. 2023
8. Total
9. Allocation of allowed losses limited by
other Code sections . . . . . .
10. Total prior year suspended losses
allowed that must be included in QBI .

10 Instructions for Form 8995 (2023)

- 11 -

Page 11 of 11 Fileid: … ions/i8995/2023/a/xml/cycle07/source 11:01 - 16-Jan-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Paperwork Reduction Act Notice We ask for the information on this form to carry out the Internal Revenue laws of the United States.
You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and
collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents
may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential,
as required by section 6103.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for business
taxpayers filing this form is approved under OMB control number 1545-0123 and is included in the estimates shown in the instructions
for their business income tax returns. The estimated burden for all other taxpayers who file this form is shown below:
Form Recordkeeping Learning Preparing, copying, assembling, and
sending
8995 4 hr., 43 min. 51 min. 2 hr., 6 min.
8995-A 7 hr., 52 min. 1 hr., 53 min. 6 hr., 6 min.
Schedule A (8995-A) 3 hr., 16 min. 7 min. 1 hr., 15 min.
Schedule B (8995-A) 1 hr., 34 min. — 20 min.
Schedule C (8995-A) 1 hr., 19 min. 7 min. 50 min.
Schedule D (8995-A) 1 hr., 5 min. 16 min. 47 min.

Instructions for Form 8995 (2023) 11

PDF file checksum: 1394481561

(Plugin #1/9.12/13.0)