How are passive losses on a K-1 treated for qualified business income (QBI)?
Your QBI for 2025 only includes passive losses that are allowed for 2025. Your K-1 can have losses that aren't allowed on your 2025 tax return and need to be carried forward to a future year.
For example, you have a K-1 reporting a net rental real estate loss of -$5,000 and, your K-1 statement shows QBI of -$5,000. On your tax return your $5,000 loss ends up being a passive loss that's not allowed. Your QBI for 2025 is $0 and your $5,000 loss is carried forward until you have passive income to allow the loss to be recognized.
For example, you have a K-1 reporting a net rental real estate loss of -$5,000 and, your K-1 statement shows QBI of -$5,000. On your tax return your $5,000 loss ends up being a passive loss that's not allowed. Your QBI for 2025 is $0 and your $5,000 loss is carried forward until you have passive income to allow the loss to be recognized.
