Qualified Business Income Deduction

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2021

Instructions for Form 8995-A

Department of the Treasury
Internal Revenue Service

Deduction for Qualified Business Income

DRAFT AS OF
December 1, 2021

Section references are to the Internal Revenue Code
unless otherwise noted.

Future Developments

For the latest information about
developments related to Form 8995-A and
its instructions, such as legislation enacted
after they were published, go to IRS.gov/
Form8995A.

What’s New

A method to track losses or deductions
suspended by other provisions. A
worksheet is added to provide a reasonable
method to track and compute your previously
disallowed losses or deductions to be
included in your qualified business income
deduction calculation for the year allowed.
See QBI Loss Tracking Worksheet, later.

General Instructions
Purpose of Form

Use Form 8995-A to figure your qualified
business income (QBI) deduction. Include
the following schedules (their specific
instructions are shown later), as appropriate:
• Schedule A (Form 8995-A), Specified
Service Trades or Businesses
• Schedule B (Form 8995-A), Aggregation
of Business Operations
• Schedule C (Form 8995-A), Loss Netting
and Carryforward
• Schedule D (Form 8995-A), Special Rules
for Patrons of Agricultural or Horticultural
Cooperatives
In general, the amount of your QBI
deduction equals your QBI component plus
your qualified real estate investment trust
(REIT) and qualified publicly traded
partnership (PTP) component (REIT/PTP
component). However, the deduction is
limited to the lesser of this amount or 20% of
your taxable income, calculated before the
QBI deduction, minus your net capital gain.
Depending on your taxable income, your QBI
component may also be limited based on the
type of trade or business, W-2 wages paid by
that business, and Unadjusted Basis
Immediately after Acquisition (UBIA) of
qualified property held by the business.

Who Can Take the
Deduction

Individuals and eligible estates and trusts
use Form 8995-A to figure the QBI deduction
if:
• You have QBI, qualified REIT dividends,
or qualified PTP income or loss; and
• Your 2021 taxable income before your
QBI deduction is more than $329,800
Dec 01, 2021

married filing jointly, $164,925 for married
filing separately, and $164,900 for all other
returns; or
• You’re a patron in a specified agricultural
or horticultural cooperative.

Otherwise, use Form 8995, Qualified
Business Income Deduction Simplified
Computation, to figure your QBI deduction.

S corporations and partnerships. S
corporations and partnerships don’t file Form
8995-A because they’re not eligible for the
deduction. Instead, S corporations and
partnerships must pass through to their
shareholders or partners the necessary
information on an attachment to
Schedule K-1.
See the Instructions for Form 1120-S,
U.S. Income Tax Return for an S
Corporation, and Form 1065, U.S. Return of
Partnership Income.
Cooperatives. Cooperatives don’t file Form
8995-A because they’re not eligible for the
deduction. Instead, cooperatives must
provide the necessary information to their
patrons on Form 1099-PATR or an
attachment to help eligible patrons figure
their deduction. Certain agricultural or
horticultural cooperatives may qualify for a
deduction under section 199A(g).
See the Instructions for Form 1120-C,
U.S. Income Tax Return for Cooperative
Associations.
Estates and trusts. To the extent that a
grantor or another person is treated as
owning all or part of a trust or estate, the
owner will compute its QBI deduction for the
portion of the trust owned as if section 199A
items had been received directly by the
owner. Generally, in the case of a
non-grantor trust or estate, the trust or estate
may either claim the QBI deduction or
provide information to their beneficiaries. In
determining the QBI deduction or the
information that must be provided to
beneficiaries, the estate or trust allocates
section 199A items based on the relative
proportion of the estate's or trust's
distributable net income (DNI) for the tax
year distributed (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 year, section 199A items
are allocated entirely to the estate or trust.
Estates and trusts may compute their
own QBI deduction to the extent section
199A items are allocated to the estate or
trust. However, section 199A items allocated
to beneficiaries aren’t includible in the
estate’s or trust’s QBI deduction
computation. See the Instructions for Form

Cat. No. 71687H

1041, U.S. Income Tax Return for Estates
and Trusts.

Electing Small Business Trusts (ESBT).
An ESBT is required to compute the QBI
deduction separately for the S and non-S
portions of the trust. If applicable, the Form
8995-A used to compute the S portion’s QBI
deduction must be attached as a PDF to the
ESBT Tax Worksheet filed with Form 1041,
and the trust must indicate that the
information is applicable to the S portion
only, by writing “ESBT” in the top margin of
the Form 8995-A. See the Instructions for
Form 1041.

Determining Your QBI
Deduction
Determine your QBI component. To
figure your QBI deduction, you must first
determine your QBI component. Your QBI
component is generally 20% of your QBI
from your domestic trades or businesses.
However, if your taxable income (before the
QBI deduction) exceeds the threshold
($329,800 if married filing jointly; $164,925
for married filing separately, and $164,900
for all other returns), your QBI for each of
your trades or businesses may be partially or
fully reduced to the greater of 50% of W-2
wages paid by the qualified trade or
business, or 25% of W-2 wages plus 2.5% of
the UBIA of qualified property from the
qualified trade or business. The partial or full
reduction to QBI is determined by your
taxable income. If your taxable income
(before the QBI deduction) is:
• At or below the threshold, you don’t need
to reduce your QBI;
• Above the threshold but below the
phase-in range (more than $329,800 and
$429,800 if married filing jointly; $164,925
and $214,925 for married filing separately,
and $164,900 and $214,900 for all other
returns), the reduction is phased in; or
• Above the threshold and phase-in range,
the full reduction applies.
Also, if you’re a patron of an agricultural
or horticultural cooperative, you must reduce
your cooperative QBI by the lesser of:
• 9% of the QBI allocable to qualified
payments, or
• 50% of W-2 wages from the trade or
business allocable to the qualified payments.
Determining your qualified trades or
businesses. Your qualified trades and
businesses generally include your trades or
businesses for which you’re allowed a
deduction for ordinary and necessary
business expenses under section 162.
However, trades or businesses conducted
by corporations and the performance of

services as an employee are never qualified
trades or businesses. Specified service
trades or businesses (SSTBs) aren’t
qualified trades or businesses for taxpayers
with taxable income, before the QBI
deduction, above the threshold and
phased-in range.
As provided in section 162, an activity
qualifies as a trade or business if your
primary purpose for engaging in the activity
is for income or profit and you’re involved in
the activity with continuity and regularity.
If you own an interest in a pass-through
entity, the trade or business determination is
made at the entity level. Material
participation under section 469 isn’t required
to qualify for the QBI deduction. Eligible
taxpayers with income from a trade or
business may be entitled to the QBI
deduction if they otherwise satisfy the
requirements of section 199A.
The ownership and rental of real property
may constitute a trade or business if it meets
the standard described above. Also,
Revenue Procedure 2019-38 provides a safe
harbor under which a rental real estate
enterprise will be treated as a trade or
business for purposes of the QBI deduction.
Rental real estate that doesn’t meet the
requirements of the safe harbor may still be
treated as a trade or business for purposes
of the QBI deduction if it is a section 162
trade or business.
Also, the rental or licensing of property to
a commonly controlled trade or business
operated by an individual or a pass-through
entity is considered a trade or business
under section 199A.

the SSTB is conducted by your pass-through
entity, the same limitation applies to the
pass-through items.
Exception 1: If your 2021 taxable income
before the QBI deduction isn’t more than
$329,800 married filing jointly, $164,925 for
married filing separately, and $164,900 for all
other returns, your SSTB is treated as a
qualified trade or business, and thus may
generate income eligible for the QBI
deduction.
Exception 2: If your 2021 taxable income
before the QBI deduction is more than
$329,800 but not more than $429,800 if
married filing jointly, $164,925 and $214,925
for married filing separately, and $164,900
and $214,900 for all other returns, an
applicable percentage of your SSTB is
treated as a qualified trade or business, you
must complete Schedule A (Form 8995-A).
An SSTB is any trade or business
providing services in the fields of:
• Health, including physicians, pharmacists,
nurses, dentists, veterinarians, physical
therapists, psychologists, and other similar
healthcare professionals. However, it
excludes services not directly related to a
medical services field, such as the operation
of health clubs or spas; payment processing;
or the research, testing, manufacture, and
sale of pharmaceuticals or medical devices;
• Law, including lawyers, paralegals, legal
arbitrators, mediators, and similar
professionals. However, it excludes services
that don’t require skills unique to the field of
law such as services by printers, delivery
services, or stenography services;
• Accounting, including accountants,
enrolled agents, return preparers, financial
auditors, and similar professionals;
• Actuarial science, including actuaries, and
similar professionals;
• Performing arts, including actors, singers,
musicians, entertainers, directors, and
similar professionals. However, it excludes
services that don’t require skills unique to the
creation of performing arts, such as the
maintenance and operation of equipment or
facilities for use in the performing arts or the
provision of services by persons who
broadcast video or audio of performing arts
to the public;
• Consulting, including persons providing
clients with professional advice and counsel
to assist in achieving goals and solving
problems, and persons providing advice and
counsel regarding advocacy with the
intention of influencing decisions made by a
government or governmental agency, and
lobbyists attempting to influence legislators
and other government officials on behalf of a
client, and other similar professionals.
However, it excludes the performance of
services other than advice or counsel, such
as sales or the provision of training and
educational courses. It also excludes
consulting services embedded in or ancillary
to the activities of a trade or business that
isn’t an SSTB, if there is no separate
payment for the consulting services;
• Athletics, including athletes, coaches, and
team managers in sports such as baseball,

basketball, football, soccer, hockey, martial
arts, boxing, bowling, tennis, golf, skiing,
snowboarding, track and field, billiards,
racing, and other forms of athletic
competition. However, it excludes services
that don’t require skills unique to athletic
competition, such as the maintenance and
operation of equipment or facilities for use in
athletic events or the provision of services by
persons who broadcast video or audio of
athletic events to the public;
• Financial services, including persons
managing clients’ wealth, advising clients on
finances, developing retirement plans,
developing wealth transition plans, providing
advisory and other similar services regarding
valuations, mergers, acquisitions,
dispositions, restructurings (including in title
11 or similar cases), and raising financial
capital by underwriting, or acting as a client’s
agent in the issuance of securities and
similar services. This includes services
provided by financial advisors, investment
bankers, wealth planners, retirement
advisors, and other similar professionals.
However, it excludes taking deposits or
making loans, but does include arranging
lending transactions between a lender and
borrower;
• Brokerage services, including persons
who arrange transactions between a buyer
and a seller of securities for a commission or
fee such as stock brokers and other similar
professionals. However, it excludes services
provided by real estate agents and brokers,
or insurance agents and brokers;
• Investing and investment management,
including persons providing, for a fee,
investing, asset management, or investment
management services, including providing
advice on buying and selling investments.
However, it excludes the service of directly
managing real property;
• Trading, including persons who trade in
securities (as defined in section 475(c)(2)),
commodities (as defined in section 475(e)
(2)), or partnership interests;
• Dealing securities (as defined in section
475(c)(2)), commodities (as defined in
section 475(e)(2)), or partnership interests;
and
• Any trade or business where the principal
asset is the reputation or skill of one or more
of its employees or owners, as demonstrated
by:
– Receiving fees, compensation, or
other income for endorsing products or
services;
– Licensing or receiving fees,
compensation or other income for the
use of an individual’s image, likeness,
name, signature, voice, trademark, or
any other symbols associated with the
individual’s identity; or
– Receiving fees, compensation, or
other income for appearing at an event
or on radio, television, or another media
format.
De minimis rule 1. If your gross receipts
from a trade or business are $25 million or
less and less than 10% of the gross receipts
are from the performance of services in a
specified service field, then your trade or

DRAFT AS OF
December 1, 2021

Services performed as an employee excluded from qualified trades or businesses. The trade or business of performing
services as an employee isn’t a trade or
business for purposes of section 199A.
Therefore, any amounts reported on Form
W-2, box 1, other than amounts reported in
box 1, if “Statutory Employee” on Form W-2,
box 13, is checked, aren’t QBI. If you were
previously an employee of a business and
continue to provide substantially the same
services to that business after you’re no
longer treated as an employee, there is a
presumption that you’re providing services
as an employee for purposes of section
199A for the 3-year period after ceasing to
be an employee. You may rebut this
presumption on notice from the IRS by
providing records such as contracts or
partnership agreements that corroborate
your status as a nonemployee. See Pub.
15-A, Employer’s Supplemental Tax Guide,
and Pub. 1779, Independent Contractor or
Employee.
SSTBs excluded from your qualified
trades or businesses. SSTBs are
generally excluded from the definition of a
qualified trade or business if the taxpayer's
taxable income exceeds the threshold plus
the phase-in range. Therefore, no QBI, W-2
wages, or UBIA of qualified property from the
specified service trade or business are taken
into account in figuring your QBI deduction. If

-2-

Instructions for Form 8995-A (2021)

business isn’t considered an SSTB, and thus
may generate income eligible for the QBI
deduction for the tax year, regardless of your
taxable income.
De minimis rule 2. If your gross receipts
from the trade or business are more than $25
million and less than 5% of the gross
receipts are from the performance of
services, then your trade or business isn’t
considered an SSTB, and thus may generate
income eligible for the QBI deduction for the
tax year, regardless of your taxable income.
De minimis rule 3. If your trade or
business provides services or property to an
SSTB and there is 50% or more common
ownership of the trades or businesses, that
portion of the business that provides
services or property to the SSTB is treated
as a separate SSTB concerning the common
owners.

must be completed each year to show your
trade or business aggregation(s) and must
include any aggregation of an RPE in which
you hold a direct or indirect interest. Failure
to disclose such aggregated trades or
businesses may cause them to be
disaggregated.
Note. You must combine the QBI, W-2
wages, and UBIA of qualified property for all
aggregated trades or businesses, for
purposes of applying the W-2 wage and
UBIA of qualified property limitations.

Instead, qualified losses and deductions are
taken into account in the tax year they’re
included in calculating your taxable income.
When losses or deductions are
suspended, you must determine the qualified
portion of the losses or deductions that must
be included in QBI in subsequent years
when allowed in calculating your taxable
income. In general, losses and deductions
incurred prior to 2018 are not qualified losses
or deductions and are not included in QBI in
the year they are included in calculating
taxable income.
If a loss or deduction is partially
suspended, only the portion of the allowed
loss or deduction attributable to QBI must be
considered when determining QBI from the
trade or business in the year the loss or
deduction is incurred. The portion of the
allowed loss or deduction attributable to QBI
is determined by first calculating the
percentage of the total loss attributable to
QBI by dividing the portion of the total loss
attributable to QBI by the overall total loss.
The allowed loss or deduction is then
multiplied by this percentage to determine
the portion of the allowed loss or deduction
attributable to QBI.
If your trade or business is an SSTB,
whether the trade or business is a qualified
trade or business is determined based on
your taxable income in the year the loss or
deduction is incurred. If your taxable income
is within the phase-in range in that year, you
must determine and apply the applicable
percentage in the year the loss or deduction
was incurred to determine the qualified
portion of the suspended loss or deduction.
Losses and deductions retain their status
as either qualified or non-qualified from year
to year while suspended. Therefore, you
must track each category of loss or
deduction until the loss or deduction is no
longer suspended. For an example of a
reasonable method to track and compute the
amount of previously disallowed losses or
deductions to be included in your QBI
deduction calculation in the year allowed,
see Tracking Losses or Deductions
Suspended by Other Provisions, later.
When losses or deductions previously
suspended by other Code provisions are
allowed in calculating taxable income, the
qualified portion of the loss or deduction
allowed under each provision is treated as a
qualified net loss carryforward from a
separate trade or business when calculating
the current year’s QBI deduction. See Line 3.
Any qualified loss or deduction from an
SSTB allowed in calculating taxable income
isn’t included on the Schedule A (Form
8995-A) as the applicable percentage was
previously determined and applied in the
year the loss or deduction was incurred and
should not be redetermined in the year the
loss or deduction is allowed.

DRAFT AS OF
December 1, 2021

Aggregation. If you’re engaged in more
than one trade or business, each trade or
business is a separate trade or business for
purposes of applying the W-2 wage limitation
or UBIA of qualified property limitation,
discussed later. However, you may choose
to aggregate multiple trades or businesses
into a single trade or business for purposes
of applying the limitations if you meet the
following requirements.
1. You or a group of persons directly or
indirectly own 50% or more of each trade or
business for a majority of the tax year,
including the last day of the tax year, and all
trades or businesses use the same tax year
end.
2. None of the trades or businesses are
an SSTB.
3. The trades or businesses meet at
least two of the following factors.
a. They provide products, property, or
services that are the same or that are
customarily offered together.
b. They share facilities or share
significant centralized business elements
such as personnel, accounting, legal,
manufacturing, purchasing, human
resources, or information technology
resources.
c. They are operated in coordination
with, or reliance upon, one or more of the
businesses in the aggregated group.
If a relevant pass-through entity (RPE)
aggregates multiple trades or businesses,
you must attach the RPE’s aggregations to
your Schedule B (Form 8995-A). You may
not separate the trades or businesses
aggregated by the RPE, but you may add
additional trades or businesses to the
aggregation, assuming the rules above are
met. If you choose to aggregate multiple
trades or businesses, complete Schedule B
(Form 8995-A) before starting Part I of Form
8995-A.
Your aggregations must be reported
consistently for all subsequent years, unless
there is a significant change in facts and
circumstances that disqualify the
aggregation. Schedule B (Form 8995-A)

Instructions for Form 8995-A (2021)

Determining your QBI. Your QBI includes
qualified items of income, gain, deduction,
and loss from your trades or businesses that
are effectively connected with the conduct of
a trade or business in the United States. This
includes qualified items from partnerships
(other than PTPs), S corporations, sole
proprietorships, and certain estates and
trusts that are allowed in calculating your
taxable income for the year.
To figure the total amount of QBI, you
must consider all items that are attributable
to the trade or business. This includes, but
isn’t limited to, unreimbursed partnership
expenses, business interest expense,
deductible part of self-employment tax,
self-employment health insurance deduction,
and contributions to qualified retirement
plans. QBI doesn’t include any of the
following.
• Items that aren’t properly includible in
income.
• Income that isn’t effectively connected
with the conduct of a trade or business within
the United States (go to IRS.gov/ECI).
• Wage income (except “Statutory
Employees” where Form W-2, box 13, is
checked).
• Amounts received as reasonable
compensation from an S corporation.
• Amounts received as guaranteed
payments.
• Amounts received as payments by a
partner for services other than in a capacity
as a partner.
• Items treated as capital gains or losses
under any provision of the Code.
• Dividends and dividend equivalents.
• Interest income not properly allocable to a
trade or business.
• Commodities transactions or foreign
currency gains or losses.
• Income, loss, or deductions from notional
principal contracts.
• Annuities (unless received in connection
with the trade or business).
• Qualified REIT dividends.
• Qualified PTP income.
See the QBI Flow Chart, later, to figure if an
item of income, gain, deduction, or loss is
included in QBI.
Losses or deductions from a qualified
trade or business that are suspended by
other provisions of the Internal Revenue
Code are not qualified losses or deductions
and therefore, are not included in your QBI
for the year. Such Code provisions include,
but aren’t limited to, sections 163(j), 179,
461(l), 465, 469, 704(d), and 1366(d).
-3-

Determining whether items included on
Schedule K-1 are includible in QBI. The
amounts reported on your Schedule K-1 as
“QBI/Qualified PTP Items Subject to
Taxpayer-Specific Determinations” from a

partnership, S corporation, estate, or trust
aren’t automatically includible in your QBI.
To determine if the item of income, gain,
deduction, or loss is includible in QBI, you
must look to how it is reported on your
federal income tax return. For example,
ordinary business income or loss is generally
included in QBI if it was used in computing
your taxable income and not excluded,
suspended, or disallowed under any other
Code section. 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
determine if an item of income, gain,
deduction, or loss is includible in QBI.

Before allocating W-2 wages among
various trades or businesses (or aggregated
trades or businesses) and/or allocating W-2
wages to QBI, first determine the total
amount of W-2 wages. There are three
methods to figure your W-2 wages.
• Unmodified box method.
• Modified box 1 method.
• Tracking wages method.

for any calendar year(s) containing any day
within that short tax year, and that are
actually paid during the short tax year; plus
• Any amounts reported in box 12 of the
relevant Forms W-2 that are properly coded
D, E, F, G, or S for any calendar year(s)
containing any day within that short tax year
that are actually deferred or contributed
during the short tax year.
However, if you have a short tax year that
doesn't include a calendar year ending within
that short tax year, the following wages are
treated as W-2 wages for a short year.
• Wages you properly report on Form W-2
that you actually paid during the tax year.
• Amounts reported on Forms W-2, box 12,
that are properly coded D, E, F, G, or S that
are actually deferred or contributed during
the short tax year.

DRAFT AS OF
December 1, 2021

Determining whether information reported on your Form 1099-PATR is includible in QBI. The amounts reported to you as
your share of patronage dividends and
similar payments on Form 1099-PATR aren’t
automatically includible in your QBI.
Payments may be included in QBI to the
extent they are (1) related to your trade or
business, (2) reported to you by the
cooperative as qualified items of income on
an attachment to Form 1099-PATR, and (3)
not payments reported as from an SSTB,
unless your taxable income is below the
threshold, in which case payments from
SSTBs are includible in your QBI.
If you received Qualified Payments
reported to you on Form 1099-PATR from a
specified agricultural or horticultural
cooperative, you’re required to reduce your
QBI by the patron reduction. See Schedule D
(Form 8995-A) Special Rules for Patrons of
Agricultural or Horticultural Cooperatives,
later.
Determining whether items included on
Schedule C (Form 1040) are includible in
QBI. The net gain or loss as reported on
your Schedule C (Form 1040) isn’t
automatically includible in your QBI. See the
QBI Flow Chart, later, to determine if an item
of income, gain, deduction, or loss is
includible in QBI.
QBI Flow Chart. Use the flow chart to
determine if an item of income, gain,
deduction, or loss is includible in QBI. See
the QBI Flow Chart, later.
Determining your W-2 wages for limitation purposes. W-2 wages generally
include amounts paid to employees for the
performance of services, plus elective
deferrals (for example, contributions to
401(k) plans, deferred compensation, and
Roth IRA contributions). Amounts paid to
statutory employees aren’t W-2 wages when
the “Statutory Employee” box on Form W-2,
box 13, is checked.
If you conduct more than one trade or
business, the W-2 wages must be allocated
among the various trades or businesses (or
aggregated trades or businesses) to the
trade or business that generated the wage
expense. Also, only the W-2 wages properly
allocable to QBI are includible. W-2 wages
are properly allocable to QBI if the
associated wage expense is taken into
account in computing QBI.

Unmodified box method. Under the
unmodified box method, W-2 wages are the
smaller of:
1. The sum of the amounts reported in
box 1 of the relevant Forms W-2, or
2. The sum of the amounts reported in
box 5 of the relevant Forms W-2.

Modified box 1 method. Under the
modified box 1 method, W-2 wages are
figured as follows.
1. Add the amounts reported in box 1 of
the relevant Forms W-2.
2. Add all amounts not considered
wages, for federal income tax withholding
purposes including, but not limited to:
a. Supplemental unemployment
compensation benefits within the meaning of
Rev. Rul. 90-72, and
b. Sick pay or annuity payments.
3. Subtract (2) from (1).
4. Add together any amounts reported
in box 12 of the relevant Forms W-2 that are
properly coded D, E, F, G, or S.
5. Add (3) and (4).

Tracking wages method. Under the
tracking wages method, W-2 wages are
figured as follows.
1. Add the amounts that are wages for
federal income tax withholding purposes and
that are also reported in box 1 of the relevant
Forms W-2.
2. Add together any amounts reported
in box 12 of the relevant Forms W-2 that are
properly coded D, E, F, G, or S.
3. Add (1) and (2).
To figure your W-2 wages using one of
the three methods above, generally use the
sum of the amounts you properly report for
each employee on Form W-2, Wage and Tax
Statement, for the calendar year ending with
or within your tax year. However, don't use
any amounts reported on a Form W-2 filed
with the Social Security Administration more
than 60 days after its due date (including
extensions).
Note. For purposes of determining W-2
wages for limitation purposes, fiscal year end
trades or businesses include qualified
amounts paid to employees for the calendar
year ended with or within the business’s tax
year.
Short tax year. If you have a short tax year,
you must use the tracking wages method
and do the following.
• Add the amounts that are wages for
federal income tax withholding purposes,
that are also reported on Form W-2, box 1,
-4-

Acquisition or disposition of a trade or
business. If you acquired or disposed of a
trade or business that causes you and
another employer to pay W-2 wages to
employees of the acquired or disposed of
trade or business during the calendar year,
then the W-2 wages for the calendar year of
the acquisition or disposition are allocated
between each employer based on the period
that the employees of the acquired or
disposed of trade or business were
employed by each employer. If you have a
short tax year that doesn’t include a calendar
year ending within your short tax year, see
Short tax year, earlier.
Non-duplication rule. Amounts that are
treated as W-2 wages for a tax year under
any method can't be treated as W-2 wages
for any other tax year. Also, an amount can't
be treated as W-2 wages by more than one
taxpayer.
Determining your UBIA of qualified property. For purposes of determining your UBIA
for all qualified property, the unadjusted
basis immediately after acquisition means
the basis on the placed-in-service date.
Qualified property includes tangible property
subject to depreciation under section 167
held, and used in the production of QBI, by
the trade or business (or aggregated trades
or businesses) during and at the close of the
tax year, for which the depreciable period
hasn’t ended before the close of the tax year.
The depreciable period ends on the later of
10 years after the property is first placed in
service by you or the last day of the last full
year in the applicable recovery period under
section 168(c). Additional first-year
depreciation under section 168 doesn’t affect
the applicable recovery period.
Improvements to property that has
already been placed in service are treated as
separate qualified property.
For qualified replacement property
acquired in a section 1031 exchange that’s
of a like-kind to the qualified relinquished
property, or for qualified replacement
property acquired in a section 1033
involuntary conversion that’s similar or
related in service or use to the qualified
converted property, the UBIA of the qualified
replacement property is the same as the

Instructions for Form 8995-A (2021)

UBIA of the qualified property exchanged,
converted, decreased by excess boot, or
increased by the amount of money paid or
the fair market value of property transferred
by the taxpayer that isn’t of a like-kind or
similar or related in service or use.
Generally, replacement property retains
the same placed-in-service date as that of
the relinquished property. However, for the
portion of the replacement property’s UBIA
that exceeds the relinquished property’s
UBIA, that portion is treated as separate
qualified property placed in service on the
date on which the replacement property is
first placed in service.
Generally, property received in a
nonrecognition transaction (section 332,
351, 361, 721, or 731) retains the same
UBIA and placed-in-service date as that of
the transferor. However, for the portion of the
transferee’s UBIA that exceeds the
transferor’s UBIA, that portion is treated as
separate qualified property placed in service
on the date of the transfer.
Property acquired within 60 days of the
year end that’s disposed of within 120 days
without being used by the trade or business
for at least 45 days is generally not qualified
property.

Coordination With Other
Code Sections
A net operating loss under section 172 is
generally figured without the QBI deduction,
meaning the QBI deduction can’t create or
increase the net operating loss. However, an
excess business loss under section 461(l) is
treated as a net operating loss carryforward
to the following tax year and is taken into
account for purposes of computing QBI in
the subsequent tax year in which it is
deducted.

trust or estate ($326,600 and $426,600 if
married filing jointly).
Don’t complete Schedule A if your taxable
income is $163,300 or less if single, married
filing separately, head of household,
qualifying widow(er), or a trust or estate
($326,600 if married filing jointly). The SSTB
exclusion doesn’t apply to you.

DRAFT AS OF
December 1, 2021

Determining Your
REIT/PTP Component

Your qualified REIT/PTP component equals
20% of your qualified REIT dividends and
qualified PTP income or loss (including your
share of qualified REIT dividends and
qualified PTP income or loss from RPEs).
Qualified REIT dividends include any
dividend you received from a REIT held for
more than 45 days and for which the
payment isn’t obligated to someone else and
that isn’t a capital gain dividend under
section 857(b)(3) and isn’t a qualified
dividend under section 1(h)(11). Plus, your
qualified REIT dividends include those
received from a regulated investment
company (RIC).
Qualified PTP income/(loss) includes
your share of qualified items of income, gain,
deduction, and loss from a PTP. It may also
include gain or loss recognized on the
disposition of your PTP interest that isn’t
treated as a capital gain or loss. It doesn’t
include any loss or deduction disallowed in
determining your taxable income for the
year. Qualified REIT dividends are reported
to you on Form 1099-DIV, Dividends and
Distributions, box 5, Section 199A dividends.
Note. PTP income generated by an SSTB
may be limited to the applicable percentage
if your taxable income is within the phase-in
range or completely excluded from qualified
PTP income if your taxable income is above
the phase-in range. See Schedule A (Form
8995-A) Specified Service Trades or
Businesses, later.

Instructions for Form 8995-A (2021)

Alternative minimum tax. The QBI
deduction used to determine regular tax is
also used to determine alternative minimum
taxable income.
Net earnings from self-employment
aren’t reduced by the QBI deduction when
computing self-employment tax.
Net investment income isn’t reduced by
the QBI deduction when computing net
investment income tax.

Puerto Rico. For purposes of determining
QBI, the United States includes Puerto Rico
for taxpayers who have taxable income from
sources within Puerto Rico that are subject
to tax under section 1. Further, W-2 wages
are figured by including W-2 wages paid for
services performed in Puerto Rico without
regard to section 3401(a)(8).

Specific Instructions

You may need to complete Schedule A, B,
C, and/or D, as applicable, prior to starting
Part I of the form.
Taxable income before qualified business income deduction. Form 8995-A,
Part III, Part IV, and Schedule A (Form
8995-A) each ask for your taxable income
figured without regard to the QBI deduction.
Enter your taxable income figured before any
QBI deduction, computed as follows.
• Form 1040, 1040-SR, or 1040-NR filers:
Form 1040, 1040-SR, or 1040-NR, line 11,
minus Form 1040, 1040-SR, or 1040-NR,
line 12.
• Form 1041 filers: Form 1041, line 23, plus
Form 1041, line 20.
• Form 1041-N filers: Form 1041-N, line 13,
plus qualified income deduction reported on
Form 1041-N, line 9.
• Form 990-T filers: Form 990-T, Part I,
line 11, plus qualified business income
deduction reported on Form 990-T, Part I,
line 9.
• S-corporation portion of an ESBT filer:
ESBT Tax Worksheet, line 13, plus ESBT
Tax Worksheet, line 11.

Schedule A (Form
8995-A)—Specified Service
Trades or Businesses

Complete Schedule A if your trade or
business is an SSTB and your taxable
income is more than $163,300 but below
$213,300 if single, married filing separately,
head of household, qualifying widow(er), or a

-5-

Don’t complete Schedule A if your taxable
income is $213,300 or greater if single,
married filing separately, head of household,
qualifying widow(er), or a trust or estate
($426,600 if married filing jointly). Your SSTB
isn’t a qualified trade or business and doesn’t
qualify for the QBI deduction.
Schedule A (Form 8995-A), Part II, should
be used for SSTBs that are PTPs, and Part I
should be used for all other SSTBs.

See SSTBs excluded from your qualified
trades or businesses., earlier.

Lines 2 and 16. Enter your QBI or Qualified
PTP income for each SSTB, as applicable.
Lines 5 and 18. See Taxable income
before qualified business income deduction.,
earlier.

Schedule B (Form
8995-A)—Aggregation of
Business Operations

If you qualify and choose to aggregate
multiple trades or businesses into a single
trade or business, you must complete
Schedule B before starting Part I.

Line 3(c). Enter your QBI for each separate
trade or business.
Line 4. If any of your aggregations have a
qualified business loss for the current year or
you have a qualified business net loss
carryforward from prior years, you must
complete Schedule C (Form 8995-A) before
starting Part I.
If none of your aggregations have a
qualified business loss in the current year
and you don’t have a qualified business loss
carryforward from prior years, enter the total
amounts on the appropriate lines of Form
8995-A, Part II.

Schedule C (Form
8995-A)—Loss Netting and
Carryforward

If any of your trades, businesses, or
aggregations have a qualified business loss
for the current year or you have a qualified
business net loss carryforward from prior
years, you must complete Schedule C (Form
8995-A) before starting Part I. This includes
prior year loss carryforwards even if the loss
was unreported or the trade or business that
generated the loss is no longer in existence.
Schedule C (Form 8995-A) offsets your
trade or business that generated a qualified
business loss against the QBI from your
other trades or businesses. The qualified
business loss must be apportioned among
all your trades or businesses with QBI in
proportion to their QBI.

Note. The line items for this schedule are
computed out of order: first figure line 1,
column (a); then skip to lines 2 through 5;
and come back to line 1, columns (b) and (c).
Line 1, column (a). If you aggregated
multiple trades or businesses into a single
business on Schedule B (Form 8995-A),
enter the aggregation group name,
Aggregation 1, 2, 3, etc., instead of entering
the business name along with the
aggregated trade’s or business’s QBI.

horticultural cooperative is a cooperative that
markets or is engaged in the manufacturing,
production, growth, or extraction of any
agricultural or horticultural products to which
Part I of subchapter T applies. See section
199A(g)(3). Also see TD 9947.

applicable. See Schedule C (Form
8995-A)—Loss Netting and Carryforward,
earlier.

Line 2. Input the QBI for the trade or
business as properly allocable to qualified
payments received from the cooperative.
Qualified payments include patronage
dividends and per-unit retains allocations.

Note. If the QBI on line 2, for the trade,
business, or aggregation, is zero, then the
amount reported on line 4, for that trade or
business, must also be zero.

Line 4. Enter your W-2 wages from the
trade, business, or aggregation.

DRAFT AS OF
December 1, 2021

Line 2. This includes the amount reported in
the prior year on Schedule C (Form 8995-A),
line 6, or if the simplified worksheet was
previously used, Form 8995, line 16,
including prior year loss carryforwards even
if the loss was unreported or the trade or
business that generated the loss is no longer
in existence. This also includes the QBI
portion of losses or deductions suspended
from use in calculating taxable income in the
year generated that are included in taxable
income in the current year. See Determining
your QBI, earlier, and QBI Loss Tracking
Worksheet, later.
Line 1, column (b). Apportion the amount
from line 5 among all your trades or
businesses with QBI, but not loss, in
proportion to their QBI.
Line 1, column (c). Enter this amount on
the corresponding line on Form 8995-A, Part
II.
Note. If the adjusted QBI from the trade or
business is zero or less after the reduction
for loss netting, then the amount reported for
W-2 wages and UBIA of qualified property
must be zero for that trade or business, as
the W-2 wages and UBIA of qualified
property from that trade or business aren’t
allowed in computing your QBI limitations.

Line 6. The amount reported on this line
must be reported in the next tax year on
Schedule C (Form 8995-A), line 2, or Form
8995, line 3, Qualified business net (loss)
carryforward from prior years, as applicable.
This amount will offset QBI in subsequent tax
years regardless of whether it is reported
and whether the trade or business that
generated the loss is still in existence. This
carryforward doesn’t affect the deductibility
of the loss for purposes of any other
provisions of the Code.
Note. If you have an overall qualified
business net loss carryforward for the year,
you don’t qualify for a QBI deduction in the
current year unless you have qualified REIT
dividends or qualified PTP income.

Schedule D (Form
8995-A)—Special Rules for
Patrons of Agricultural or
Horticultural Cooperatives

You must complete Schedule D (Form
8995-A) if you’re a patron in a specified
agricultural or horticultural cooperative and
are claiming a QBI deduction in relation to
your trade or business conducted with the
cooperative. A specified agricultural or

Line 4. Enter the portion of W-2 wages from
Form 8995-A, line 4, that are allocable to the
qualified payments.

Part I—Trade, Business, and
Aggregation Information

You must complete Part I if you have QBI
from a qualified trade, business, or
aggregation. If you don’t have QBI, and only
have REIT, PTP, and/or a domestic
production activities deduction (DPAD), skip
Parts I through III and complete Part IV.
Before you begin completing Part I,
determine if you need to complete
Schedule A, B, or C by answering the
following questions.
1. Do you have an SSTB? If yes, see
Schedule A (Form 8995-A) Specified Service
Trades or Businesses, earlier.
2. Are you choosing to aggregate
multiple trades or businesses into a single
trade or business? If yes, complete
Schedule B (Form 8995-A) before starting
Part I.
3. Did any of your trades, businesses, or
aggregations have QBI for the year or do you
have a qualified business loss carryforward
from prior years? If yes, complete
Schedule C (Form 8995-A) before starting
Part I.

Line 1. If you aggregated multiple trades or
businesses into a single business on
Schedule B (Form 8995-A), enter the
aggregation group name, for example,
Aggregation 1, 2, 3, etc., instead of entering
the business name, check the box under
1(c), and leave line 1(d) blank.
Enter on line 1(d) the employer
identification number (EIN). If you don’t have
an EIN, enter your social security number
(SSN) or individual taxpayer identification
number (ITIN). If you’re the sole owner of a
limited liability company (LLC) that isn’t
treated as a separate entity for federal
income tax purposes, enter the EIN given to
the LLC. If you don’t have such an EIN, enter
the owner's name, and tax identification
number.

Part II—Determine Your
Adjusted Qualified Business
Income

You must complete Part II if you have QBI
from a qualified trade, business, or
aggregation.

Line 2. If you have four or more trades or
businesses, attach a statement with the
information for Parts I, II, and III, as
-6-

Line 7. Enter your share of the UBIA for all
qualified property for the trade or business.
Note. If the QBI on line 2, for the trade,
business, or aggregation, is zero, then the
amount reported on line 7, for that trade or
business, must also be zero.

Line 14. Report the amount from
Schedule D (Form 8995-A), line 6, if any.
Patrons of agricultural or horticultural
cooperatives are required to reduce their
QBI component by the lesser of:
• 9% of QBI allocable to qualified payments
from a specified cooperative, or
• 50% of W-2 wages allocable to qualified
payments.
If you’re a patron of an agricultural or
horticultural cooperative, complete
Schedule D (Form 8995-A). See Schedule D
(Form 8995-A)—Special Rules for Patrons of
Agricultural or Horticultural Cooperatives,
earlier.
Line 15. Subtract the patron reduction on
line 14 from the amount on line 13. If zero or
less, enter zero.

Line 16. Add all amounts reported on
line 15. If there are four or more trades or
businesses, include line 15 amounts from all
trades or businesses and complete line 16
only on the first page. Leave line 16 blank on
the attached statements described in the
line 2 instructions.

Part III—Phased-in Reduction

Complete Part III if your taxable income is
more than $163,300 but below $213,300 if
single, married filing separately, head of
household, qualifying widow(er), or a trust or
estate ($326,600 and $426,600 if married
filing jointly), and line 10 is smaller than
line 3. Otherwise, skip Part III.

Line 20. See Taxable income before
qualified business income deduction, earlier.

Part IV—Determine Your
Qualified Business Income
Deduction

If you’re claiming a QBI deduction, you must
complete Part IV.
Line 28. If the net amount is a loss, enter as
a negative number.
Any negative amount will be carried
forward to the next year. This carryforward
doesn’t affect the deductibility of the loss for
purposes of any other provisions of the
Code.
Line 33. See Taxable income before
qualified business income deduction, earlier.

Instructions for Form 8995-A (2021)

Line 34. Enter the amount from your tax
return as follows.
• Form 1040, 1040-SR, or 1040-NR filers,
your qualified dividends on line 3a, plus your
net capital gain. If you’re not required to file
Schedule D (Form 1040), your net capital
gain is the amount reported on Form 1040,
1040-SR, or 1040-NR, line 7. If you file
Schedule D (Form 1040), your net capital
gain is the smaller of Schedule D (Form
1040), line 15 or 16, unless line 15 or 16 is
zero or less, in which case nothing is added
to your qualified dividends.
• Form 1041 filers, your qualified dividends
allocable to estates and trusts on line 2b(2).
For estates or trusts required to file

Schedule D (Form 1041), add the qualified
dividends to the smaller of Schedule D (Form
1041), line 18a(2), or line 19(2), unless either
line 18a(2) or 19(2) is zero or less, in which
case nothing is added to your qualified
dividends.
• Form 1041-N filers, your qualified
dividends line 2b, plus the smaller of Form
1041-N, Schedule D, lines 10 or 11, unless
line 10 or 11 is zero or less, in which case
nothing is added to your qualified dividends.
• Form 990-T filers who are trusts,
Schedule D (Form 1041), the smaller of
line 18(a)(2) or 19(2), unless either line 18(a)
(2) or 19(2) is zero or less, in which case the
net capital gain for purposes of section 199A
is zero.

• S-corporation portion of an ESBT, your
ESBT Tax Worksheet, line 2b, plus the
smaller of your ESBT’s Schedule D (Form
1041), line 18(a)(2), or line 19(2), is zero or
less, in which case nothing is added to your
qualified dividends.
Line 39. Enter the amount from line 39 on
Form 1040 or 1040-SR, line 13; Form
1040-NR, line 13a; Form 1041, line 20; Form
1041-N, line 9; Form 990-T, line 9;
S-corporation portion of an ESBT, line 11.

DRAFT AS OF
December 1, 2021

Instructions for Form 8995-A (2021)

-7-

Line 40. If the sum of lines 28 and 29 result
in a loss (negative number), the loss must be
carried forward to next year.

QBI Flow Chart
Figure 1. Use this chart to determine if an item of income, gain, deduction, or loss is included in QBI.
No

1. Is the item effectively connected with the conduct of a trade or
business within the United States?
Yes

DRAFT AS OF
December 1, 2021
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,
contributions to qualified retirement plans, unreimbursed
partnership expenses, and interest expenses for the purchase of the
partnership/S corporation interest/stock)?

No

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
conversions, interest from debt-financed 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.

No

Yes
4. Is the item included in figuring your taxable income? Items
disallowed or limited, including the basis, at-risk, passive loss, or
excess business loss rules, aren’t included in QBI until the year
included in taxable income.

No

Yes
Yes

5. Is the item treated as a capital gain (loss) or dividend/dividend
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
working capital, reserves, or similar accounts isn’t allocable to a
trade or business.

Yes

No
Yes

7. Is the item an annuity, other than an annuity received in
connection with the trade or business?
No
8. Is the item a commodities transaction, foreign currency gain (loss)
described in section 954(c)(1)(C) or (D), or from a notional principal
contract under section 954(c)(1)(F)?

Yes

No
9. Is the item income (loss) from a qualified PTP? If “Yes,” it’s not
QBI, but it’s included in the REIT/PTP component of the QBI
computation. Include this item as a qualified item of income, gain,
deduction, or loss from a PTP.

Yes

No
Yes

10. Is the item W-2 wage income (except where “Statutory
employee” is checked in box 13 of Form W-2)?

This item isn’t QBI.

No
See Figure 2, QBI Flow
Chart (continued).

-8-

Instructions for Form 8995-A (2021)

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

11. Is the item an amount received for reasonable compensation
from an S corporation, an amount received as a guaranteed
payment, or a payment received for services other than in a capacity
as a partner under section 707(a)?

DRAFT AS OF
December 1, 2021
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
phase-in range? If “Yes,” this item is partially includible in QBI.
Complete Schedule A (Form 8995-A).

Yes

This item is QBI.

This item isn’t QBI.

No

Tracking Losses or
Deductions Suspended by
Other Provisions
A worksheet, QBI Loss Tracking
Worksheet (below), is provided that
CAUTION can help you track your suspended
losses. Losses and deductions that would be
properly includible in QBI, if such loss or
deduction wasn't suspended (excluded from
taxable income) by other provisions, must be
tracked separately for purposes of
determining the future amount includible as
negative QBI. Use as many copies of the
worksheet as necessary to separately track
your suspended loss(es) under each
suspending provision.

!

Specific Instructions
Note. All losses should be entered as a
negative number on the worksheet.
Column A. Total suspended losses in
year of disallowance. For rows 1 through
4, enter your suspended losses by year
starting with any pre-2018 losses. Additional
rows can be added as needed in future
years. Allocate these losses between
Non-QBI and QBI in columns E and I. See
below.
Note. All pre-2018 losses are allocable to
Non-QBI.
Column E. Non-QBI suspended losses.
For rows 1 through 4, enter suspended
losses allocable to Non-QBI into the
appropriate year row (row 1, pre-2018; row
2, 2018; row 3, 2019, etc.).
Column I. QBI suspended losses. For
rows 2 through 4, enter suspended losses
allocable to QBI into the appropriate year
row (row 2, 2018; row 3, 2019, etc.).
Column B. QBI fixed percentage. Divide
column I by column A for each year and

Instructions for Form 8995-A (2021)

enter the percentage in the corresponding
year row.
Column C. Prior year suspended losses
allowed. For rows 2 through 4, enter any
prior year suspended losses allowed in the
corresponding row for the year allowed.
Note. The total prior year suspended losses
allowed entered in column C, row 5, can't
exceed total amount entered in column A,
row 5.
Column F. Non-QBI allocated prior year
suspended losses allowed; and Column
J, QBI allocated prior year suspended
losses allowed. When allocating prior year
suspended losses allowed (column C)
between Non-QBI (column F) and QBI
(column J), the First-In-First-Out (FIFO)
method must be used. To apply this rule,
prior year suspended losses allowed must
first be allocated to any losses suspended
from pre-2018 years, 2017, and earlier, (row
1), until the pre-2018 losses are exhausted.
All prior year suspended losses allowed
allocated to pre-2018 years are Non-QBI.
Once all pre-2018 losses have been used,
losses will be allocated based on the QBI
Fixed Percentage in column B for each
subsequent year in which losses were
suspended.

Prior Year Suspended Losses
Allowed in 2018
Note. If column C, row 2, is zero, skip Step 1
through Step 3.
Step 1. Allocate prior year suspended
losses allowed from column C, row 2, up to
the total suspended losses reported in
column A, row 1, to column F, row 2.
Step 2. If there are any prior year
suspended losses allowed remaining from
column C, row 2, after Step 1, allocate the
remaining prior year suspended losses
allowed between QBI and Non-QBI.

-9-

1. For the allocation to QBI, multiply the
remaining losses (after Step 1), up to the
total suspended losses reported in column A,
row 2, by column B, row 2, and enter this
amount in column J, row 2.
2. For the allocation to Non-QBI,
multiply the remaining losses (after Step 1),
up to the total suspended losses reported in
column A, row 2, by 100% less the amount in
column B, row 2, and add it to any amount
already included in column F, row 2.
Step 3. Complete the instructions for
columns G, K, H, and L for rows 1 and 2.

Prior Year Suspended Losses
Allowed in 2019
Note. If column C, row 3, is zero, skip Step 4
through Step 6.
Step 4. Allocate prior year suspended
losses allowed from column C, row 3, up to
the remaining suspended losses reported in
column H, row 1, to column F, row 3.
Step 5. If there are any prior year
suspended losses allowed remaining from
column C, row 3, after Step 4, allocate the
remaining prior year suspended losses
allowed between QBI and Non-QBI using the
FIFO method until each year's loss has been
reduced to zero.
1. For the allocation to QBI, multiply the
remaining losses (after Step 4), up to the
sum of the remaining suspended losses
reported in column H, row 2, and column L,
row 2, by column B, row 2, and enter this
amount in column J, row 3.
2. For the allocation to Non-QBI,
multiply the remaining losses (after Step 4),
up to the sum of the remaining suspended
losses reported in column H, row 2, and
column L, row 2, by 100% less the amount in
column B, row 2, and add it to any amount
already included in column F, row 3.
3. If any prior year suspended losses
allowed remain from column C, row 3, after

Steps 5(a) and (b), multiply the remaining
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,
row 3, by column B, row 3, and add it to any
amount already included in column J, row 3.
4. Then, multiply the remaining 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, row 3, by
100% less the amount in column B, row 3,
and add it to any amount already included in
column F, row 3.

F, row 3, must tie to the amount reported in
column G(ii), row 5, etc.

columns G and K for the corresponding year.
See Row 6 below.

Column H. Remaining suspended losses.
For each row, take the amount in column E
less the amounts utilized in all columns G(i),
G(ii), and G(iii). This amount can't be more
than zero.

Row 6. Allocation of allowed losses limited by other Code sections. To allocate
the allowed losses limited by other Code
sections between QBI and Non-QBI, start
with QBI for the 2018 row. Divide column
K(i), row 5, by the sum of column K(i), row 5,
and column G(i), row 5, multiplied by column
D, row 2, and enter this amount in column
K(i), row 6. Written as a formula: column K(i),
row 6 = column D, row 2 x (column K(i), row
5 ÷ (column K(i), row 5 + column G(i), row
5)).
Next, compute the amount for Non-QBI
for the 2018 row. Divide column G(i), row 5,
by the sum of column G(i), row 5, and
column K(i), row 5, multiplied by column D,
row 2, and enter this amount in column G(i),
row 6. Written as a formula: column K(i), row
6 = column D, row 2 x (column K(i), row 5 ÷
(column G(i), row 5 + column K(i), row 5)).
Continue the computation for columns
K(ii) and G(ii) and then for columns K(iii) and
G(iii), except multiply the percentage times
the amount in column D, row 3, for 2019 and
column D, row 4, for 2020, respectively.

Column L. Remaining suspended losses.
For each row, take the amount in column I
less the amounts utilized in all columns K(i),
K(ii), and K(iii). This amount can't be more
than zero.

DRAFT AS OF
December 1, 2021

Step 6. Complete the instructions for
columns G, K, H, and L for rows 1 through 3.

Prior Year Suspended Losses
Allowed in 2021 and Beyond

Repeat Step 4 through Step 6 and adjust as
necessary for any prior year suspended
losses allowed in column C, row 4, and each
row thereafter, as applicable.

Additional year rows and columns may be
added as needed in future years.
Columns G and K. Utilized “20XX.” Use
these columns to show how the allocated
prior year suspended losses allowed in
columns F and J are utilized each year. For
example, the loss reported in column F, row
2, must tie to the amount reported in column
G(i), row 5, and the loss reported in column

Column D. Allowed losses limited by other Code sections. When a prior year
suspended loss allowed under one Code
section is subsequently limited by another
Code section, this loss shouldn't be included
in the QBI calculation until the loss is allowed
in the computation of taxable income.
Instead, that loss is added to the total
suspended losses in the year of
disallowance under the new limiting Code
section for continuation of its suspension.
This column along with row 6, addresses
how to account for such losses.
In column D, enter the amount of any
prior year suspended losses allowed under
this Code section, but subsequently
disallowed under another Code section on
the row for the year the loss was allowed
under this Code section. These amounts will
be allocated between Non-QBI and QBI in

-10-

Row 7. Total prior year suspended losses allowed that must be included in
QBI. The amounts reported in columns K(i),
K(ii), and/or K(iii), row 7, equal the loss
amount that must be included in your current
year QBI, respectively for each year, as a
loss from a separate trade or business.

Instructions for Form 8995-A (2021)

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 FIFO method.
Code
[Enter the Code section limiting your loss].

DRAFT AS OF
December 1, 2021

Part I

Suspended & Allowed Losses
A. Total suspended
losses in year
of disallowance

1.
2.
3.
4.
5.
6.

B. QBI fixed percentage

D. Allowed losses
limited by other
Code sections

0.00%

Pre-2018
2018
2019
2020
2021
Total

Part II

C. Prior year
suspended
losses allowed

%
%
%
%

Non-QBI Suspended and Allowed Losses

Allocable to Non-QBI

E. Suspended
losses
1.
2.
3.
4.
5.
6.
7.

F. Allocated prior
year suspended
losses allowed

G(i). Utilized
2018

G(ii). Utilized
2019

G(iii). Utilized
2020

G(iv). Utilized
2021

H. Remaining
suspended
losses

K(i). Utilized
2018

K(ii). Utilized
2019

K(iii). Utilized
2020

K(iv). Utilized
2021

L. Remaining
suspended
losses

Pre-2018
2018
2019
2020
2021
Total
Allocation of allowed losses limited by other Code
sections . . . . . . . . . . . . .

Part III

QBI Suspended and Allowed Losses

Allocable to QBI
I. Suspended
losses
1.
2.
3.
4.
5.
6.
7.

J. Allocated prior
year suspended
losses allowed

Pre-2018
2018
2019
2020
2021
Total
Allocation of allowed losses limited by other Code
sections . . . . . . . . . . . . .

8. Total prior year suspended losses allowed that
must be included in QBI
. . . . . . . .

Instructions for Form 8995-A (2021)

-11-

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.

DRAFT AS OF
December 1, 2021

Form

Record keeping

Learning

8895
8895-A
Schedule A (8895-A)
Schedule B (8895-A)
Schedule C (8895-A)
Schedule D (8895-A)

4 hrs., 43 min.
7 hrs., 52 min.
3 hrs., 16 min.
1 hr., 34 min.
1 hr., 19 min.
1 hr., 5 min.

51 min.
1 hr., 53 min.
7 min.
—
7 min.
16 min.

-12-

Preparing, copying, assembling and
sending
2 hrs., 6min.
6 hrs., 6 min.
1 hr., 15 min.
20 min.
50 min.
47 min.

Instructions for Form 8995-A (2021)