PDF document

- 1 -

Userid: CPM Schema: instrx Leadpct: 100% Pt. size: 9 Draft Ok to Print
AH XSL/XML Fileid: … ions/i8995/2022/a/xml/cycle06/source (Init. & Date) _______

Page 1 of 10 13:39 - 9-Mar-2023

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
2022

Instructions for Form 8995

Qualified Business Income Deduction Simplified Computation

Section references are to the Internal Revenue Code unless Instructions for Form 1120-S, U.S. Income Tax Return for an S
otherwise noted. Corporation, and Form 1065, U.S. Return of Partnership Income.
Cooperatives. Cooperatives aren’t eligible for the deduction.
Future Developments Instead, cooperatives must provide the necessary information to
For the latest information about developments related to Form their patrons on Form 1099-PATR or an attachment to help
8995 and its instructions, such as legislation enacted after they eligible patrons figure their deduction. Certain agricultural or
were published, go to IRS.gov/Form8995. horticultural cooperatives may qualify for a deduction under
section 199A(g). See the Instructions for Form 1120-C, U.S.
What’s New Income Tax Return for Cooperative Associations, for rules
Taxable income limitation adjustments. Taxable income applicable to agricultural and horticultural cooperatives.
limitations are adjusted for inflation and increased. The married Estates and trusts. To the extent that a grantor or another
filing separately income limitation amount is the same as the person is treated as owning all or part of a trust or estate, the
“Single” income limitation amount for the 2022 tax year. owner will compute its QBI deduction for the portion owned as if
Filing status name changed to qualifying surviving spouse. section 199A items had been received directly by the owner.
The filing status qualifying widow(er) is now called qualifying Generally, a non-grantor trust or estate may either claim the QBI
surviving spouse. The rules for the filing status have not deduction or provide information to their beneficiaries. In
changed. The same rules that applied for qualifying surviving determining the QBI deduction or the information that must be
widow(er) apply to qualifying surviving spouse. provided to beneficiaries, the estate or trust allocates section
199A items based on the relative proportion of the estate's or
A method to track losses or deductions suspended by oth- trust's distributable net income (DNI) for the tax year distributed
er provisions. A worksheet is added to provide a reasonable (or required to be distributed) to the beneficiary or retained by
method to track and compute your previously disallowed losses the estate or trust. If the estate or trust has no DNI for the tax
or deductions to be included in your qualified business income year, section 199A items are allocated entirely to the estate or
deduction calculation for the year allowed. A new row has been trust.
included for the 2022 suspended and allowed losses. See
Although estates and trusts may compute their own QBI
Tracking Losses or Deductions Suspended by Other Provisions,
deduction, to the extent section 199A items are allocable to the
later.
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 Electing Small Business Trusts (ESBT). An ESBT must
Use Form 8995 to figure your qualified business income (QBI) compute the QBI deduction separately for the S and non-S
deduction. Individual taxpayers and some trusts and estates portions of the trust. The Form 8995 used to compute the S
may be entitled to a deduction of up to 20% of their net QBI from portion’s QBI deduction must be attached as a PDF to the ESBT
a trade or business, including income from a pass-through entity, tax worksheet filed with Form 1041. When attached to the ESBT
but not from a C corporation, plus 20% of qualified real estate tax worksheet, the trust must show that the information is
investment trust (REIT) dividends and qualified publicly traded applicable to the S portion only, by writing “ESBT” in the top
partnership (PTP) income. However, your total QBI deduction is margin of the Form 8995. See the Instructions for Form 1041.
limited to 20% of your taxable income, calculated before the QBI
deduction, minus net capital gain. Determining Your Qualified Trades or
Who Can Take the Deduction Businesses
Individuals and eligible estates and trusts that have QBI use Your qualified trades and businesses include your domestic
Form 8995 to figure the QBI deduction if: trades or businesses for which you’re allowed a deduction for
• You have QBI, qualified REIT dividends, or qualified PTP ordinary and necessary business expenses under section 162.
income or loss (all defined later); and However, trades or businesses conducted by corporations and
• Your 2022 taxable income before your QBI deduction is less the performance of services as an employee aren’t qualified
than or equal to $170,050 if single, married filing separately, trades or businesses. Generally, specified service trades or
head of household, qualifying surviving spouse, or are a trust or businesses (SSTBs) aren’t qualified trades or businesses.
estate, or $340,100 if married filing jointly; and However, all or a part of the SSTB may be a qualified trade or
• You aren’t a patron in a specified agricultural or horticultural business if your taxable income is at or below the threshold or
cooperative. within the phase-in range.
Otherwise, use Form 8995-A, Qualified Business Income As provided in section 162, an activity qualifies as a trade or
Deduction, to figure your QBI deduction. business if your primary purpose for engaging in the activity is for
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
through to their shareholders or partners the necessary For purposes of section 199A, if you own an interest in a
information on an attachment to Schedule K-1. See the pass-through entity, the trade or business determination is made

Mar 9, 2023 Cat. No. 69662S

- 2 -

Page 2 of 10 Fileid: … ions/i8995/2022/a/xml/cycle06/source 13:39 - 9-Mar-2023

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

at the entity level. Material participation under section 469 isn’t or $340,100 if married filing jointly, your SSTB is treated as a
required to qualify for the QBI deduction. Eligible taxpayers with qualified trade or business.
income from a trade or business may be entitled to the QBI Exception 2: If your taxable income before the QBI
deduction if they otherwise satisfy the requirements of section deduction is more than $170,050 but not more than $220,050 if
199A. single, head of household, qualifying surviving spouse, or are a
trust or estate, and is more than $340,100 but not more than
The ownership and rental of real property may constitute a $440,100 if married filing jointly, an applicable percentage of
trade or business if it meets the standard described above. Also, your SSTB is treated as a qualified trade or business, you must
Rev. Proc. 2019-38 provides a safe harbor under which a rental complete Schedule A (Form 8995-A).
real estate enterprise will be treated as a trade or business for
purposes of the QBI deduction. Rental real estate that doesn’t Aggregation. If you’re engaged in more than one trade or
meet the requirements of the safe harbor may still be treated as business, each trade or business is a separate trade or business
a trade or business for purposes of the QBI deduction if it’s a for purposes of section 199A. However, you may choose to
section 162 trade or business. aggregate multiple trades or businesses into a single trade or
business for purposes of figuring your deduction, if you meet the
The rental or licensing of property to a commonly controlled following requirements.
trade or business operated by an individual or a pass-through 1. You or a group of persons directly or indirectly own 50%
entity is considered a trade or business under section 199A. or more of each trade or business for the majority of the tax year,
Services performed as an employee excluded from quali- including the last day of the tax year, and all trades or
fied trades or businesses. The trade or business of businesses use the same tax year end;
performing services as an employee isn’t a trade or business for 2. None of the trades or businesses are an SSTB and
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
QBI. If you were previously an employee of a business and a. They provide products, property, or services that are the
continue to provide substantially the same services to that same or that are customarily offered together.
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 non-employee. one or more of the businesses in the aggregated group.
For more information on if you’re an employee or an
independent contractor, see Pub. 15-A, Employer’s If a relevant pass-through entity (RPE) aggregates multiple
Supplemental Tax Guide, and Pub. 1779, Independent trades or businesses, you may not separate the trades or
Contractor or Employee. businesses aggregated by the RPE, but you may add additional
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;
• Consulting; Your aggregations must be reported consistently for all
• Athletics; subsequent years, unless there is a significant change in facts
• Financial services; and circumstances that disqualify the aggregation.
• Brokerage services;
• Investing and investment management; Note. You must combine the QBI, W-2 wages, and Unadjusted
• Trading or dealing in securities, partnership interests, Basis Immediately after Acquisition (UBIA) of qualified property
commodities; or for all aggregated trades or businesses, for purposes of applying
• Any trade or business where the principal asset is the the W-2 wages and UBIA of qualified property limits. However,
reputation or skill of one or more of its employees or owners, as these limits won’t apply until your income, before the QBI
demonstrated by: deduction, is more than the threshold. If your income is more
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
for the use of taxpayer’s image, likeness, name, signature, Income
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 2022 taxable income before the QBI estates and trusts that are allowed in calculating your taxable
deduction is less than or equal to $170,050 if single, head of income for the year.
household, qualifying surviving spouse, or are a trust or estate,

-2- Instructions for Form 8995 (2022)

- 3 -

Page 3 of 10 Fileid: … ions/i8995/2022/a/xml/cycle06/source 13:39 - 9-Mar-2023

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

To figure the total amount of QBI, you must consider all items your QBI deduction calculation in the year allowed, see Tracking
that are attributable to the trade or business. This includes, but Losses or Deductions Suspended by Other Provisions, later.
isn’t limited to, unreimbursed partnership expenses, business
interest expense, deductible part of self-employment tax, When losses or deductions previously suspended by other
self-employment health insurance deduction, and contributions Code provisions are allowed in calculating taxable income, the
to qualified retirement plans. QBI doesn’t include any of the qualified portion of the loss or deduction allowed under each
following: provision is treated as a qualified net loss carryforward from a
• Items that aren’t properly included in income. separate trade or business when calculating the current year’s
• Income that isn’t effectively connected with the conduct of a QBI deduction. See Line 3.
trade or business within the United States (go to IRS.gov/ECI). Any qualified loss or deduction from an SSTB allowed in
• Wage income (except “Statutory Employees” where Form calculating taxable income isn’t included on the Schedule A
W-2, box 13, is checked). (Form 8995-A) as the applicable percentage was previously
• Amounts received as reasonable compensation from an S determined and applied in the year the loss or deduction was
corporation. incurred and should not be redetermined in the year the loss or
• Amounts received as guaranteed payments. deduction is allowed.
• Amounts received as payments by a partner for services other
than in a capacity as a partner. Determining if items included on Schedule K-1 are inclu-
• Items treated as capital gains or losses under any provision of ded in QBI. The amounts reported on your Schedule K-1 as
the Internal Revenue Code (Code). “QBI/Qualified PTP Items Subject to Taxpayer-Specific
• Dividends and dividend equivalents. Determinations” from a partnership, S corporation, estate, or
• Interest income not properly allocable to a trade or business. trust aren’t automatically included in your QBI. To figure if the
• Commodities transactions or foreign currency gains or losses. item of income, gain, deduction, or loss is included in QBI, you
• 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 portion of the suspended loss or deduction. Qualified PTP income or loss includes your share of qualified
items of income, gain, deduction, and loss from a PTP. It may
Losses and deductions retain their status as either qualified also include gain or loss recognized on the disposition of your
or non-qualified from year to year while suspended. Therefore, partnership interest that isn’t treated as a capital gain or loss.
you must track each category of loss or deduction until the loss
or deduction is no longer suspended. For an example of a Note. PTP income generated by an SSTB may be limited to the
reasonable method to track and compute the amount of applicable percentage or excluded if your taxable income
previously disallowed losses or deductions to be included in exceeds the threshold, in which case you may need to complete
Instructions for Form 8995 (2022) -3-

- 4 -

Page 4 of 10 Fileid: … ions/i8995/2022/a/xml/cycle06/source 13:39 - 9-Mar-2023

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

Part II of Schedule A (Form 8995-A). See the Instructions for the trade(s) or business(es) and include the income and loss
Form 8995-A for more information. from those trade(s) or business(es) in the total for line 2.
When losses or deductions from a PTP are suspended in the
year incurred, you must determine the qualified portion of the Line 3
losses or deductions that must be included as qualified PTP Include here the qualified portion of trade or business (loss)
losses or deductions in subsequent years when allowed in carryforward allowed in calculating taxable income in the current
calculating your taxable income. In general, losses and year, even if the loss was from a trade or business that is no
deductions that were incurred prior to 2018 are not qualified PTP longer in existence. See Determining Your Qualified Business
losses or deductions and are not included in calculating taxable Income, earlier, and Tracking Losses or Deductions Suspended
income. by Other Provisions, later. Losses and deductions that remain
If your PTP is an SSTB, whether the PTP loss is a qualified suspended by other Code provisions are not qualified losses
loss is determined based on your taxable income in the year the and deductions and must be tracked separately for use when
loss or deduction is incurred. If your taxable income is within the subsequently allowed in calculating taxable income.
phase-in range in that year, you must determine and apply the
applicable percentage in the year the loss or deduction was Line 4
incurred to determine the qualified portion of the suspended loss If you have a qualified business net loss for the year, you don’t
or deduction. qualify for the QBI deduction unless you have qualified REIT
Losses and deductions retain their status as either qualified dividends or PTP income. The loss will be carried forward to next
or non-qualified from year to year while suspended. Therefore, year. This carryforward doesn’t affect the deductibility of the loss
you must track each loss or deduction from a PTP until the loss for purposes of any other provisions of the Code.
or deduction is no longer suspended.
Line 6
When losses or deductions previously suspended by other
Code provisions are allowed in calculating taxable income, the Enter income as a positive number and losses as a negative
qualified portion of the loss or deduction allowed for each PTP is number.
treated as a qualified net loss carryforward from a separate PTP
when calculating the current year’s QBI deduction. See Line 7. Line 7
Any qualified PTP loss or deduction from an SSTB allowed in Include here the qualified portion of PTP (loss) carryforward
calculating taxable income isn’t included on the Schedule A allowed in calculating taxable income in the current year, even if
(Form 8995-A) as the applicable percentage was previously the loss was from a PTP that you no longer hold an interest in or
calculated and applied in the year the loss or deduction was is no longer in existence. Losses and deductions that remain
incurred and should not be redetermined in the year the loss or suspended by other Code provisions are not qualified losses
deduction is allowed. and deductions and must be tracked separately from any
qualified trade or business losses for use when subsequently
Specific Instructions allowed in calculating taxable income.

Line 8
Line 1
Any negative amount will be carried forward to the next year.
If you aggregated multiple trades or businesses into a single
This carryforward doesn’t affect the deductibility of the loss for
business, enter the aggregation group name. For example, purposes of any other provisions of the Code.
Aggregation 1, 2, 3, etc., instead of entering the business name,
and leave line 1(b) blank.
Line 11
Note. If you aggregated trades or businesses, you must attach Enter your taxable income figured before any QBI deduction,
Schedule B (Form 8995-A) or similar schedule. computed as follows.
• Form 1040, 1040-SR, or 1040-NR filers: Form 1040,
If you’re relying on the safe harbor contained in Rev. Proc. 1040-SR, or 1040-NR, line 11, minus Form 1040, 1040-SR, or
2019-38, enter each enterprise as identified on the statement 1040-NR, line 12.
required for use on the safe harbor. For example, Enterprise 1, • Form 1041 filers: Form 1041, line 23, plus Form 1041, line 20.
2, 3, etc. • Form 1041-N filers: Form 1041-N, line 13, plus qualified
income deduction reported on Form 1041-N, line 9.
Enter on line 1(b) the employer identification number (EIN). If Form 990-T filers: Form 990-T, Part I, line 11, plus Form
•
you don’t have an EIN, enter your social security number (SSN) 990-T, Part I, line 9.
or individual taxpayer identification number (ITIN). If you’re the S-corporation portion of ESBT filers: ESBT Tax Worksheet,
•
sole owner of an LLC that isn’t treated as a separate entity for line 13, plus ESBT Tax Worksheet, line 11.
federal income tax purposes, enter the EIN given to the LLC. If
you don’t have an EIN, enter the owner's name and tax Line 12
identification number.
Enter the amount from your tax return as follows.
Enter on line 1(c) the net qualified business income or (loss) • Form 1040, 1040-SR, or 1040-NR, line 3a, plus your net
for the trade, business, or aggregation reported in the capital gain. If you’re not required to file Schedule D (Form
corresponding row. Do not include here any losses or 1040), your net capital gain is the amount reported on Form
deductions suspended from use in calculating taxable income in 1040, 1040-SR, or 1040-NR, line 7. If you file Schedule D (Form
the current year or any portion of qualified losses or deductions 1040), your net capital gain is the smaller of Schedule D (Form
previously suspended by other Code provisions that are allowed 1040), line 15 or 16, unless line 15 or 16 is zero or less, in which
in calculating taxable income in the current year. See Line 3, case nothing is added to the qualified dividends.
later. • Form 1041, line 2b(2), plus your net capital gain. For estates
or trusts required to file Schedule D (Form 1041), add the
Line 2 qualified dividends to the smaller of Schedule D (Form 1041),
If you have more than five trades or businesses, attach a line 18a(2), or line 19(2), unless either line 18a(2) or 19(2) is
statement with the name and taxpayer identification number of

-4- Instructions for Form 8995 (2022)

- 5 -

Page 5 of 10 Fileid: … ions/i8995/2022/a/xml/cycle06/source 13:39 - 9-Mar-2023

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

zero or less, in which case nothing is added to the qualified Column B. QBI fixed percentage. Divide column I by column
dividends. A for each year and enter the percentage in the corresponding
• Form 1041-N, line 2b, plus the smaller of Form 1041-N, year row.
Schedule D, line 10 or 11, unless line 10 or 11 is zero or less, in
which case nothing is added to the qualified dividends. Column C. Prior year suspended losses allowed. For rows
• Form 990-T filers who are trusts, Schedule D (Form 1041), 2 through 6, enter any prior year suspended losses allowed in
the smaller of line 18a(2) or 19(2), unless either line 18a(2) or the corresponding row for the year allowed.
19(2) is zero or less, in which case the net capital gain for
purposes of section 199A is zero. Note. The total prior year suspended losses allowed entered in
• S-corporation portion of an ESBT, your ESBT Tax Worksheet, column C, row 7, can't exceed the total amount entered in
line 2b, plus the smaller of your ESBT’s Schedule D (Form column A, row 7.
1041), line 18a(2) or 19(2) is zero or less, in which case nothing Column F. Non-QBI allocated prior year suspended losses
is added to your qualified dividends. allowed and Column J, QBI allocated prior year suspended
loses allowed. When allocating prior year suspended losses
Line 15 allowed (column C) between Non-QBI (column F) and QBI
Enter this amount on your Form 1040 or 1040-SR, line 13; Form (column J), the First-In-First-Out (FIFO) method must be used.
1040-NR, line 13a; Form 1041, line 20; Form 1041-N, line 9; To apply this rule, prior year suspended losses allowed must first
Form 990-T, line 9; and S-corporation portion of an ESBT, be allocated to any losses suspended from pre-2018 years,
line 11. 2017 and earlier, (row 1), until the pre-2018 losses are
exhausted. All prior year suspended losses allowed allocated to
Line 16 pre-2018 years are Non-QBI. Once all pre-2018 losses have
This is the amount to be carried forward to the next year. This been used, losses will be allocated based on the QBI Fixed
amount will offset QBI in later tax years regardless of whether Percentage in column B for each subsequent year in which
the trade(s) or business(es) that generated the loss is still in losses were suspended.
existence. This carryforward doesn’t affect the deductibility of
any loss for purposes of any other provisions of the Code. Prior Year Suspended Losses Allowed in 2018
Note. If column C, row 2, is zero, skip Step 1 through Step 3.
Line 17
If the amount is more than zero, the loss must be carried forward Step 1. Allocate prior year suspended losses allowed from
to next year. This amount will offset REIT dividends and PTP column C, row 2, up to the total suspended losses reported in
income in later tax years regardless of whether the qualified column A, row 1, to column F, row 2.
PTP(s) that generated the loss is still in existence. This Step 2. If there are any prior year suspended losses allowed
carryforward doesn’t affect the deductibility of any loss for remaining from column C, row 2, after Step 1, allocate the
purposes of any other provisions of the Code. remaining prior year suspended losses allowed between QBI
and Non-QBI.
Tracking Losses or Deductions 1. For the allocation to QBI, multiply the remaining losses
(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
A worksheet, QBI Loss Tracking Worksheet, is provided column J, row 2.
2. For the allocation to Non-QBI, multiply the remaining
CAUTION Losses and deductions that would be properly includible
! below that can help you track your suspended losses. losses (after Step 1), up to the total suspended losses reported
in QBI, if such loss or deduction wasn't suspended (excluded in column A, row 2, by 100% less the amount in column B, row 2,
from taxable income) by other provisions, must be tracked and add it to any amount already included in column F, row 2.
separately for purposes of determining the future amount
includible as negative QBI. Use as many copies of the Step 3. Complete the instructions for columns G, K, H, and L for
worksheet as necessary to separately track your suspended rows 1 and 2.
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.
Note. All losses should be entered as a negative number on the Step 4. Allocate prior year suspended losses allowed from
worksheet. column C, row 3, up to the remaining suspended losses reported
in column H, row 1, to column F, row 3.
Column A. Total suspended losses in year of disallowance.
For rows 1 through 5, enter your suspended losses by year Step 5. If there are any prior year suspended losses allowed
starting with any pre-2018 losses. Additional rows can be added remaining from column C, row 3, after Step 4, allocate the
as needed in future years. Allocate these losses between remaining prior year suspended losses allowed between QBI
Non-QBI and QBI in columns E and I. See below. and Non-QBI using the FIFO method until each year's loss has
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
reported in column H, row 2, and column L, row 2, by column B,
6, 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;
row 3, 2019, etc.). 2. For the allocation to Non-QBI, multiply the remaining
losses (after Step 4), up to the sum of the remaining suspended
Column I. QBI suspended losses. For rows 2 through 6, 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.

Instructions for Form 8995 (2022) -5-

- 6 -

Page 6 of 10 Fileid: … ions/i8995/2022/a/xml/cycle06/source 13:39 - 9-Mar-2023

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 income (loss) from a qualied PTP? If “Yes,” it’s not
QBI, but it’s included in the REIT/PTP component of the QBI Yes
computation. 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 (2022)

- 7 -

Page 7 of 10  Fileid: … ions/i8995/2022/a/xml/cycle06/source                                     13:39 - 9-Mar-2023

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 (2022)                              -7-

- 8 -

Page 8 of 10      Fileid: … ions/i8995/2022/a/xml/cycle06/source                                            13:39 - 9-Mar-2023

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

3. If any prior year suspended losses allowed remain from                section is subsequently limited by another Code section, this 
column C, row 3, after Steps 5(a) and (b), multiply the remaining        loss shouldn't be included in the QBI calculation until the loss is 
losses (after Steps 5(a) and (b)), up to the sum of the remaining        allowed in the computation of taxable income. Instead, that loss 
suspended losses reported in column H, row 3, and column L,              is added to the total suspended losses in the year of 
row 3, by column B, row 3, and add it to any amount already              disallowance under the new limiting Code section for 
included in column J, row 3.                                             continuation of its suspension. This column along with row 7 
4. Then, multiply the remaining losses (after Steps 5(a) and             addresses how to account for such losses.
(b)), up to the sum of the remaining suspended losses reported           In column D enter the amount of any prior year suspended 
in column H, row 3, and column L, row 3, by 100% less the                losses allowed under this Code section, but subsequently 
amount in column B, row 3, and add it to any amount already              disallowed under another Code section on the row for the year 
included in column F, row 3.                                             the loss was allowed under this Code section. These amounts 
                                                                         will be allocated between Non-QBI and QBI in columns G and K 
Step 6. Complete the instructions for columns G, K, H, and L for         for the corresponding year. See row 7 below.
rows 1 through 3.
                                                                         Row 8. Allocation of allowed losses limited by other Code 
                                                                         sections. To allocate the allowed losses limited by other Code 
Prior Year Suspended Losses Allowed in 2020 and                          sections between QBI and Non-QBI, start with QBI for the 2018 
Beyond                                                                   row. Take column K(i), row 7, divided by the sum of column K(i), 
                                                                         row 7, plus column G(i), row 7, multiplied by column D, row 2, 
Repeat Step 4 through Step 6 and adjust as necessary for any             and enter this amount in column K(i), row 8. Written as a 
prior year suspended losses allowed in column C, row 4, and              formula: column K(i), row 8 = column D, row 2 x (column K(i), 
each row thereafter, as applicable.                                      row 7 ÷ (column K(i), row 7 + column G(i), row 6)).
                                                                         Next, compute the amount for Non-QBI for the 2018 row. 
Additional year rows and columns may be added as needed                  Take column G(i), row 7, divided by the sum of column G(i), row 
in future years.                                                         7 + column K(i), row 7, multiplied by column D, row 2, and enter 
Columns G and K. Utilized “20XX.”   Use these columns to                 this amount in column G(i), row 8. Written as a formula: column 
show how the allocated prior year suspended losses allowed in            K(i), row 8 = column D, row 2 x (column G(i), row 7 ÷ (column 
columns F and J are utilized each year. For example, the loss            G(i), row 7 + column K(i), row 7)).
reported in column F for row 2 must tie to the amount reported           Continue the computation for columns K(ii) and G(ii), K(iii) 
column G(i), row 6, and the loss reported in column F for row 3          and G(iii), and then for columns K(iv) and G(iv), except multiply 
must tie to the amount reported in column G(ii), row 6, etc.             the percentage times the amount in column D, row 4, for 2019, 
Column H. Remaining suspended losses. For each row,                      column D, row 5, for 2020, and column D, row 6, for 2022, 
take the amount in column E less the amounts utilized in all             respectively.
columns G(i), G(ii), G(iii), and G(iv). This amount can't be more        Row 9. Total prior year suspended losses allowed that 
than zero.                                                               must be included in QBI. The amounts reported in columns 
Column L. Remaining suspended losses. For each row, take                 K(i), K(ii), K(iii), K(iv), and or K(v) for row 9 equals the loss 
the amount in column I less the amounts utilized in all columns          amount that must be included in your current year QBI, 
K(i), K(ii), K(iii), and K(iv). This amount can't be more than zero.     respectively for each year, as a loss from a separate trade or 
                                                                         business.
Column D. Allowed losses limited by other Code sections. 
When a prior year suspended loss allowed under one Code 

                                                                     -8-                          Instructions for Form 8995 (2022)

- 9 -

Page 9 of 10 Fileid: … ions/i8995/2022/a/xml/cycle06/source 13:39 - 9-Mar-2023

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

Instructions for Form 8995 (2022) -9-

- 10 -

Page 10 of 10 Fileid: … ions/i8995/2022/a/xml/cycle06/source 13:39 - 9-Mar-2023

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 hrs., 43 min. 51 min. 2 hrs., 6 min.
8995-A 7 hrs., 52 min. 1 hr., 53 min. 6 hrs., 6 min.
Schedule A (8995-A) 3 hrs., 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.

-10- Instructions for Form 8995 (2022)

PDF file checksum: 1727499766

(Plugin #1/9.12/13.0)