Trust taxation is a weak point of mine, but what you're describing is completely possible with an individual taxpayer. Pre-2018 passive activity losses don't factor into the QBI calc, so it's possible the taxpayer could have positive QBI for a T/B but zero taxable income for that same T/B if taxable income was reduced by pre-2018 PAL. Pretty good spot to be in...
lenraphael wrote:the passive loss universe, especially for pre 2018 losses, is independent of the Sect 199A world.
Pre-2018, yes. Post-2018, not so much...
If a post-2018 PAL is disallowed under 469, it's disallowed for 199A. See Treas Reg §1.199A-3(b)(2)(i)(B) and §1.199A-3(b)(1)(iv). Drake tax software still does not handle this correctly, and requires tracking in a separate workpaper and overrides in the software.