The SB/SE division of the IRS issued a memorandum instructing agents that the qualified business income (QBI) deduction to which a business owner may be entitled on a return that he or she files, the IRS will not allow the deduction on a substitute for return (SFR) prepared by the IRS when no return is filed. But if an owner subsequently files a delinquent return that includes a QBI deduction, the IRS will consider it using the same policies applicable to other items included on the return. Bottom line: File on time or ask for a filing extension.
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